[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” locked=”off” global_colors_info=”{}”][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” locked=”off” global_colors_info=”{}”][et_pb_column type=”1_3″ module_class=”table-contents” _builder_version=”4.23″ background_color=”#f4f4f4″ 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=”4.27.4″ header_2_font_size=”32px” hover_enabled=”0″ header_2_font_size_tablet=”30px” header_2_font_size_phone=”26px” header_2_font_size_last_edited=”on|tablet” global_colors_info=”{}” sticky_enabled=”0″]<\/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 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
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[\/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” admin_label=”Image” _builder_version=”4.26.1″ _module_preset=”default” custom_margin=”-25px||||false|false” global_colors_info=”{}”][\/et_pb_image][et_pb_text admin_label=”Definition description” _builder_version=”4.27.4″ header_2_font_size=”32px” hover_enabled=”0″ header_2_font_size_tablet=”30px” header_2_font_size_phone=”26px” header_2_font_size_last_edited=”on|tablet” global_colors_info=”{}” sticky_enabled=”0″]<\/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, 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 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":28,"featured_media":0,"menu_order":0,"template":"","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-289808","glo","type-glo","status-publish","hentry"],"yoast_head":"\nMarkup vs margin<\/h2>\n
Common markups in various industries<\/h2>\n
Finding the right markup for your business<\/h2>\n
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