Markup Calculator

Try our free online Markup Calculator to estimate selling price and how much profit you will earn from each product

Markup calculator

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.

  • what does the markup mean?
  • formula: how to find out selling price and markup?

Markup definition

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

  • office rent,
  • salary
  • amortization
  • Insurance
  • Property taxes
  • Depreciation of assets

Variable costs are expenses that depends of the company’s production volume. The costs rise when production increases and fall as production decreases.

  • delivery
  • direct materials
  • commissions
  • Billable stuff wages
  • Piece rate labor
  • Freight out and so on

To run a profitable business, you should pay attention to 3 points below to choose right markup:

  1. Product cost price - the sum of fixed and variables expenses divided by the number of items;
  2. Buyer's solvency - the situation where the liabilities of a person or firm exceed its assets;
  3. Cost of attracting a client - a.k.a. CAC - customer acquisition cost. The sum of all marketing and sales expenses to attract each new client

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.

Formula to calculate

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

  • Fill in cost to produce
  • Fill in % markup

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

First — put cost price

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

Second — put cost price

Multiply the COGS by the markup percentage and the divided by 100.

For example:

COGS = $4.5

Markup = 250%

4 * 250 / 100 = 10

Third — find out the selling price

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