How to Calculate a Mark-Up Price

Speak with similar business owners to determine the right mark-up price.
Speak with similar business owners to determine the right mark-up price. (Image: Comstock Images/Comstock/Getty Images)

A successful business is one that will make a profit, and the only way you can make a profit is by charging more for the items you're selling than what you paid for them. The difference between your cost and your consumer's cost is called the "mark-up price." Determining how high your mark-up can be is often difficult. If your mark-up is too high, your customers won't buy your products. But if your mark-up is too low, you won't make enough money to cover your costs.

Write down how much it cost you to purchase the product you are selling. Let's say the baseball you bought wholesale cost $2.50.

Write down the mark-up percentage you'd like to apply to the item you are selling. Let's assume you'd like to use a mark-up of 25% on the baseball.

Divide your mark-up percentage by 100 to convert it to a decimal. In this example, 25 divided by 100 is 0.25.

Subtract the result from Step 3 from 1. In the this example, 1 minus 0.25 is 0.75.

Divide the original cost of your product by the result you obtained in Step 4. This result will be what you charge a customer to purchase the product. In the baseball example, you would divide $2.50 by 0.75, and the result would be 3.34. Your selling price would be $3.34.

Subtract the the amount you paid for the product from the result in Step 5 to determine the mark-up price. In the baseball example, you would subtract $3.34 from $2.50. The mark-up price of the baseball is 84 cents.

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