How to Calculate a Markup Percent

A markup is the difference between the cost of producing a product and the price that it is sold for. This can be expressed either directly as a dollar amount or as a percentage of the original cost. To determine what the markup percent is on an item, you will need to know your operating expenses, price reduction, expected profit and forecasted sales. Price reductions are sales that will be held to sell leftover merchandise. Expected profit is how much profit you would like to make for selling your products.

Things You'll Need

• Paper
• Pencil
• Calculator (optional)

Instructions

1. Add the operating expenses, price reductions and expected profit. For example, say you make toys and it costs $500 to produce them, you expect price reductions of $250 and hope to make $500 profit. $500 + $250 + $500 = $1,250.

2. Add your forecasted sales, which is how much you expect to make in sales revenue, and the price reductions. Continuing the example, if you forecast sales of $750 then $750 + $250 = $1,000.

3. Divide the result from step one by the result from step 2 and multiply by 100. The mark up percent for the example is $1,250 / $1,000 = 125 percent.

Tips & Warnings

• Profit margin is similar to markup but is the percent of the selling price that is profit instead of the percentage of cost.

References

• Markup or Margin