Markup
Increase over cost as a percentage.
Formula
Variables
Example
Selling a $10 item for $15 is a markup of 5/10 × 100% = 50%.
How it works
Markup tells you how much a seller has increased the original cost of an item, measured relative to that cost. The difference between selling price and cost gives the extra money earned above cost, and dividing by cost turns that extra amount into a percentage of the original amount paid.
When to use it
Use this when pricing goods for retail, comparing selling prices to purchase costs, or checking profit margins on individual items. It is common in business, accounting, and everyday shopping problems involving resale.
Worked example, step by step
A shop buys a lamp for $40 and sells it for $52. Markup = (Price - Cost) / Cost × 100% Markup = (52 - 40) / 40 × 100% Markup = 12 / 40 × 100% Markup = 0.3 × 100% Markup = 30% So, the lamp has a markup of 30%.
Common mistakes to avoid
- Using selling price instead of cost in the denominator
- Forgetting to subtract cost from price before converting to a percentage
- Confusing markup with profit as a dollar amount rather than a percentage
Did You Know?
Markup and margin are not the same: a 50% markup on cost is only a 33% margin on the selling price.
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