How to Calculate Selling Price Based on Markup Percentage

Price markup is added to the cost of a product to be sold.

Every business is dependent on selling its products -- whether goods or services -- for a profit. To make a profit your business must add a markup to the price at which the business purchased or manufactured the product. The profit percentage of items per sale can be calculated as a profit margin or profit markup. Think of profit markup as how much the retail price is marked up from the cost of the item.

Instructions

1. Write down or note the cost of an item and the markup percentage. For example, Item A has a cost to your business of $10 and the markup will be 35 percent.

2. Convert the markup percentage to decimal form and add one. In this example, 35 percent is 0.35 in decimal form. Adding one produces 1.35. This is your markup factor.

3. Multiply the calculated markup factor times the cost of the item. In the example, $10 times 1.35 gives a selling price of $13.50. The item has been marked up by 35 percent from the cost.

Tips & Warnings

• If you work with several different markup percentages, practice converting the percentages to decimal form. Remember, markup percentages greater than 100 will result in markup factors greater than two. For example, a 150-percent markup means multiplying the cost times 2.50 (1 plus 1.50).

• Markup percentage and profit margin are different percentages. Markup is from cost and margin is the percentage of profit in the selling price.

References

• buildingtrade.org.uk: Markup or Margin