[et_pb_section fb_built=”1″ custom_padding_last_edited=”off|desktop” _builder_version=”4.27.2″ custom_margin=”0px||0px||false|false” custom_padding=”0px||0px||false|false” custom_padding_phone=”0px||||false|false” da_disable_devices=”off|off|off” locked=”off” global_colors_info=”{}” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row column_structure=”1_3,2_3″ _builder_version=”4.27.2″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” width=”100%” custom_margin=”0px||0px||false|false” custom_padding=”0px||0px||false|false” global_colors_info=”{}”][et_pb_column type=”1_3″ module_class=”table-contents” _builder_version=”4.23″ background_color=”#f3f2f6″ custom_padding=”25px||25px||true|false” sticky_position=”top” sticky_limit_bottom=”section” sticky_position_tablet=”top” sticky_position_phone=”none” sticky_position_last_edited=”on|desktop” pac_dcm_carousel_specific_module_num=”0″ border_radii=”on|24px|24px|24px|24px” global_colors_info=”{}” custom_padding__hover=”|||”][et_pb_text _builder_version=”4.23″ text_font=”||||||||” global_colors_info=”{}” background__hover_enabled=”on|desktop”][\/et_pb_text][\/et_pb_column][et_pb_column type=”2_3″ _builder_version=”4.16″ custom_padding=”|||” pac_dcm_carousel_specific_module_num=”0″ global_colors_info=”{}” custom_padding__hover=”|||”][et_pb_text admin_label=”Definition description” _builder_version=”4.26.1″ header_2_font_size=”32px” header_2_font_size_tablet=”30px” header_2_font_size_phone=”26px” header_2_font_size_last_edited=”on|tablet” global_colors_info=”{}”]<\/p>\n
This is the amount that\u2019s added to the cost of a product or service to determine its selling price. Markup is usually expressed as a percentage of the cost, and the simple fact is that it helps businesses cover their expenses while generating profits.<\/p>\n
Markup lets businesses price their products or services<\/a> in such a way that they can continue to operate. It helps retailers, dealers, and other service providers stay profitable while ensuring they can cover all operational costs (e.g. rent, wages, overhead expenses).<\/p>\n <\/p>\n [\/et_pb_text][et_pb_image src=”https:\/\/www.reckon.com\/au\/wp-content\/uploads\/2025\/02\/Markup-icon-4.png” alt=”Markup formula” title_text=”Markup Icon 4″ align=”center” _builder_version=”4.26.1″ _module_preset=”default” custom_margin=”-25px||||false|false” hover_enabled=”0″ global_colors_info=”{}” sticky_enabled=”0″ admin_label=”Image”][\/et_pb_image][et_pb_text admin_label=”Definition description” _builder_version=”4.26.1″ header_2_font_size=”32px” header_2_font_size_tablet=”30px” header_2_font_size_phone=”26px” header_2_font_size_last_edited=”on|tablet” global_colors_info=”{}”]<\/p>\n The markup formula is very simple:<\/p>\n Markup = (Selling Price \u2212 Cost Price) \u00f7 Cost Price \u00d7 100<\/strong><\/em><\/p>\n Here\u2019s an example of a markup calculation: Say you\u2019re a retailer, and you buy sunglasses from a supplier for $20 each. You then decide to sell them for $60 to your customers. In this scenario, your markup will be equal to:<\/p>\n (60\u221220) \u00f7 20 \u00d7 100 = 200%<\/strong><\/em><\/p>\n In other words, the retail price is 200% higher than the item’s original cost, with a $40 gross profit per sunglasses sale.<\/p>\n While it\u2019s true that markup and margin are related concepts<\/a>, they are not the same, and businesses should consider both when pricing products correctly. Markups are calculated as a percentage of the cost prices, whereas margins are calculated as a percentage of the sale prices. This is important because a higher markup doesn\u2019t necessarily translate to a higher margin.<\/p>\n For example, if one of your products costs $50 and is sold for $100, the markup is 100%, but the margin is only 50%. As a business owner, you need to understand that both figures play a role in setting competitive prices and helping you achieve healthy profit levels. A small increase in markup could result in a big difference in your profit margin.<\/p>\n Different industries will apply different markups based on the level of competition, prices to produce items, consumer demand, and more. High-demand luxury goods often have excessive markups, whereas other industries that sell essential goods will mostly have lower markups due to price sensitivity.<\/p>\n As an example, while designer clothing and electronics might have markups of anywhere between 250\u2013500% or more, grocery staples tend to be sold with only a 25\u201350% markup. Professionals like consultants and tradespeople can also apply markups to their hourly rates and material costs.<\/p>\n Setting an appropriate markup will depend on market demand and competition, your customers’ expectations, operating costs, industry benchmarks, the gross profit needed to continue operating your business, and more.<\/p>\n The good news is that now that you have a better understanding of markup strategies, you can start to think about how to price your business\u2019s products and services most effectively. Get the markup right, and you\u2019ll stay profitable<\/a> over the long term while continuing to keep your customers satisfied.<\/p>\n [\/et_pb_text][et_pb_text admin_label=”See related terms” _builder_version=”4.26.1″ _module_preset=”default” global_colors_info=”{}”]<\/p>\n See related terms<\/strong><\/p>\n [\/et_pb_text][ba_social_share icon_bg=”#03002e” icon_padding=”10px|12px|10px|12px|true|true” layout=”classic” show_text=”off” btn_padding=”0px|0px|0px|0px|false|false” btn_bg_color=”RGBA(255,255,255,0)” _builder_version=”4.23″ _module_preset=”default” custom_margin=”50px||||false|false” custom_padding=”25px||||false|false” custom_css_before=” content: %22SHARE THIS%22;|| font-size: 16px;|| font-weight: 700;|| line-height: 22px;|| letter-spacing: 0em;|| text-align: center;|| color: #ff5447;|| margin-bottom: 10px;|| display: inline-flex;|| position: absolute;|| margin-top: 10px;” border_width_top_main=”1px” border_color_top_main=”#e4e4e4″ border_radii_icon=”on|5px|5px|5px|5px” global_colors_info=”{}” custom_css_before_last_edited=”off|desktop”][ba_social_share_child _builder_version=”4.23″ _module_preset=”default” global_colors_info=”{}”][\/ba_social_share_child][ba_social_share_child network_type=”facebook” _builder_version=”4.23″ _module_preset=”default” global_colors_info=”{}”][\/ba_social_share_child][ba_social_share_child network_type=”linkedin” _builder_version=”4.23″ _module_preset=”default” global_colors_info=”{}”][\/ba_social_share_child][ba_social_share_child network_type=”email” _builder_version=”4.23″ _module_preset=”default” global_colors_info=”{}”][\/ba_social_share_child][\/ba_social_share][\/et_pb_column][\/et_pb_row][\/et_pb_section]<\/p>\n","protected":false},"excerpt":{"rendered":" This is the amount that\u2019s added to the cost of a product or service to determine its selling price. Markup is usually expressed as a percentage of the cost, and the simple fact is that it helps businesses cover their expenses while generating profits. Why is markup important for small businesses? Markup lets businesses price […]<\/p>\n","protected":false},"author":35,"featured_media":0,"menu_order":0,"template":"","format":"standard","meta":{"_et_pb_use_builder":"on","_et_pb_old_content":"","_et_gb_content_width":"","inline_featured_image":false,"_lmt_disableupdate":"no","_lmt_disable":"","footnotes":""},"class_list":["post-288871","glo","type-glo","status-publish","format-standard","hentry"],"yoast_head":"\nHow to calculate your markup<\/h2>\n
Markup vs margin<\/h2>\n
Common markups in various industries<\/h2>\n
Finding the right markup for your business<\/h2>\n
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