Try our free online Markup Calculator to estimate selling price and how much profit you will earn from each product
If you want to succeed in business, you have to know figures. A successful business guy should keep a lot of metrics under control: EBITDA, Revenue, LTV, Costs, etc.
According to wikipedia, it is the ratio between the cost and selling price. Seller adds markup onto the total cost to cover his fixed and variable expenses.
Fixed costs - are expenses that doesn’t change with a decrease or increase in the number of services (or goods) company produce and sell
Variable costs are expenses that depends of the company’s production volume. The costs rise when production increases and fall as production decreases.
To run a profitable business, you should pay attention to 3 points below to choose right markup:
The price of your product should be higher than the sum of these 3 indicators to gain profit from the first customer’s purchase. If you have a saas or another subscription business model it is more important to calculate life time value (LTV) - the sum of all consumer’s (user’s) payments.
Calcapps markup calculator is most often used to determine the sale price. If you want to calculate margin check this page.
Well, you’re selling a good or service and want to gain profit. How to choose the right selling price?
Let's say you sell headphones, which you buy for $4. You read once that the mark-up on such goods should be 250% — 300%, so how to calculate the sell price?
You have 3 ways to find out the price:
1. use our free online markup calculator
You can also check this page to see examples for inspiration
2. Use excel
3. Calculate manually
Regardless of the chosen method, the result will be found by one formula
Calculate the cost of good (COGS): summarize the fixed and variable costs for the production and delivery of the whole lot. Now divide this amount by the number of items, so you will know the cost of each product.
In our example:
100 headphones * $4 = $400
Delivery = $50
So, your costs are $450
COGS = $450/100 = $4.5
Multiply the COGS by the markup percentage and the divided by 100.
COGS = $4.5
Markup = 250%
4 * 250 / 100 = 10
Now add the result of the first step to the second step. It will be a selling price.
In our example: $4.5 + $10 = 14.5
P.S. If you also know selling price and COGS and want to determine % of markup follow the formula:
Markup = 100 * profit / cost