Markup Calculator

Pricing up from $30

Markup is measured against cost. Take what you paid, multiply by one plus the markup, and that is the price: price = cost × (1 + markup). The calculator opens on a $30 cost and a 50% markup, so $30 × 1.50 = $45, and the $15 between the two is gross profit. Nothing else goes into that $15 — no rent, no wages, no tax — which is what "gross" means.

Run it in reverse and the definition falls out: markup = (price − cost) ÷ cost. Buy at $30, sell at $45, and $15 ÷ $30 is 50%. Switch "Also known" to Selling price and the calculator does that division. Set it to Profit margin % and it solves the third way — from the margin you want to the markup you'd need — which is the case people reach for most and get wrong most, covered further down.

Because the base is the cost, markup has no ceiling. A $12 item sold for $36 carries a 200% markup; jewellery and espresso routinely run past that. Anyone who tells you a percentage "can't be over 100" is thinking of margin.

Fifteen dollars, two names

Every markup has a margin sitting inside it, and the calculator prints both because they are the same $15 divided by different things. Against the $30 cost it is a 50% markup. Against the $45 price it is a 33.3% margin. The cost is always the smaller of the two, so the markup is always the larger percentage — and the gap widens as the markup climbs. A 20% markup is a 16.7% margin, barely different. A 100% markup is a 50% margin. A 200% markup is a 66.7% margin, a third of the figure you started with.

To get from a markup you know to the margin it produces: margin = markup ÷ (1 + markup). To get from a margin you want to the markup you'd have to apply: markup = margin ÷ (1 − margin). The table is those two formulas at the values that come up in practice, and it reads in either direction. The profit margin calculator runs the same table from the margin side, at different values.

The margin that got applied as a markup

The expensive mistake is a target set as margin and executed as markup. A shop wants to keep 40% of every sale. Someone multiplies the $30 cost by 1.40, prices it at $42, and moves on. The $12 of profit on that $42 is a 28.6% margin — more than a quarter short of the goal on every unit, and nothing about the shelf tag says so. The price that leaves 40 cents of each dollar is $30 ÷ 0.60 = $50, which is a 66.7% markup. The Profit margin % setting exists so that the multiplication never happens.

The mirror-image trap is the discount. Markup goes on the cost, but a discount comes off the price, and the price is the bigger number. That $45 item with a 50% markup has $15 in it. Take 20% off and $9 of the $15 is gone: the sale is $36 and the markup has shrunk to 20%. Take a third off and all of it is gone — $45 less 33.3% is $30, the cost, and the markup is zero. A promotion that sounds smaller than the markup can still consume most of it, which is why "50% markup" and "a third off" cannot coexist for long.

What HST does to cost and price — nothing

The two amounts you enter are before sales tax, on both sides. If you're registered for GST/HST, the tax on the supplier's invoice isn't part of your cost — you claim it back as an input tax credit — and the tax on your own invoice isn't part of your price, because you collect it for the CRA and remit it. A $45 sale in an HST province puts more than $45 in the till, but only $45 of it is revenue, and only $30 was ever cost. Mix the two conventions — a tax-inclusive cost copied off the supplier's invoice against a pre-tax shelf price — and the markup comes out understated.

The line that puts you into that system is $30,000 of taxable sales over four consecutive calendar quarters, or in any single quarter on its own. Below it you can stay a small supplier and charge no tax — and then the tax on what you buy does stay in your cost, because there's no credit to claim it back with. Either way, the arithmetic on this page runs on pre-tax amounts. What the profit is worth once income tax and CPP come off it is on the self-employed tax calculator.