How to Markup From Cost

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If you want to make a profit in your business, you have to understand how to mark up from cost. This will ensure that you are able to make the salary that you desire for the year. Not planning can lead to poor product mark up and a loss of potential income for your business. It can also lead customers astray if you are marking up from cost too much. You need to find the perfect balance. There are several ways you can do this.

Things You'll Need

  • HP12C Platinum Calculator
  • Pen
  • Paper
  • Product info

Using the HP12C Platinum Calculator

Turn the calculator on and choose Algebraic mode. This calculator is designed to figure out the mark up cost for you.

Type in the cost of the product you want to mark up and hit enter.

Type in the price you want to get for the item and hit the button with a triangle and percent on it. This will give you the percent of mark up. You can adjust your mark up price accordingly.

Using What You Want Your Profit to Be

Determine how much money you need to make that year. That figure should be what you want to make after all of your bill are paid, etc. So that figure is how much you take home after expenses.

Get the total number of products you are going to sell for the year. This can be an estimate based on previous selling experience.

Divide your total number of products by how much money you want to make for the year. If you want to make $50,000 and you have 10,000 items you believe you can sell you would compute the markup cost like this: 10,000 divided by 50,000 = 5. So you would want to mark up each item $5.00. In small products this isn't reasonable, and in large products this isn't enough. You are going to have to adjust the prices of the small and large products so that your total's even out to $5.

Adjust your product mark-ups by watching the buyers. If a buyer skips out on buying your product because it costs more than the shop down the street you may want to lower the profit amount $3.00. On the flip side of things you want to increase your price if the products are flying off of the shelves. That means you aren't charging enough. Consider marking them up $7 instead of the average $5.

Tips & Warnings

  • Mark up should coincide with supply and demand.
  • Never mark up so high that a customer can't afford to buy your product.

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