How to Calculate Markup Percentage

Calculate markup percentage to see what the stores are really making

Markup is the difference between how much an item costs you, and how much you sell that item for--it's your profit per item. Any person working in business or retail will find the skill of being able to calculate markup percentage very valuble.

Things You'll Need

• Purchasing cost of the item
• Selling cost of the item
• Calculator

Instructions

1. Calculate your dollar markup. This is done by subtracting your buying price from your selling price. So, if you purchase an item for $10, and you sell it for $15, your dollar markup is found by by subtracting 10 from 15 and your result is $5.

2. Decide whether you want to calculate your percentage markup based on cost or selling price. Once you choose which you will be using to calculate, it is important you stick to the method you choose throughout all your calculations, or you will end up with faulty data. If you decide to calculate your percent markup based on cost, go on to Step 3. If you decide to calculate your percent markup based on selling price, go on to Step 4.

3. Calculate percent markup based on cost. This is done by dividing the dollar markup by the cost. So, if the cost is $10, and the dollar markup is $5, you would take $5/$10 and get 0.5, or 50 percent. So your percentage markup based on cost would be 50 percent.

4. Calculate your percent markup based on selling price. This is done by dividing the dollar markup by the selling price. So, if your selling price is $15 and your dollar markup is $5, you would take $5/$15 and you would get 0.33, or 30 percent. So, your percentage markup based on selling price would be 33 percent.

5. Make sure you consistently use either cost of the product or selling price to find the percent markup on an item. Even though the cost, selling price, and dollar markup will always be the same, the percentage markup will be drastically different depending on if you calculate it using selling price or cost. Using selling price will give you a lower percentage markup (assuming you are making a profit), while using cost will give you a higher percentage markup.

Tips & Warnings

• Make sure you express your markup in terms of percentage. Markup can also be calculated in terms of dollar amount.

• Percent markup can be calculated using cost or selling price. Depending on which you use, you will get different values for your percent markup. Make sure that you continuously use either cost or selling price to determine all your markup percentages, or you will have inconsistent data.

Resources

• Read this Article in Spanish
• Retail sales calculator
• Retail margin and markup table