Markup is calculated on cost: selling price = cost × (1 + markup %). Note markup and margin are different — a 50% markup is not the same as a 50% margin. We show both so you can price with confidence.
Retail typically marks up 50-100% over wholesale cost. Restaurants often target 60-70% food cost markup (roughly a 3-4x multiplier on ingredient cost). Service businesses vary widely, but a 2-3x markup over direct labor cost is common to cover overhead and profit.
A 100% markup on a $10 cost gives you a $20 price — but that's only a 50% margin, not 100%. This gap surprises a lot of first-time business owners setting prices for the first time. Always double-check which number you're actually targeting.
If an item costs you $40 and you apply a 50% markup, your selling price is $60 ($40 plus 50% of $40), which works out to a 33% margin, not 50% — a common point of confusion. To hit a specific margin target instead, use margin-based pricing directly: price equals cost divided by (1 minus target margin), so a $40 cost at a 50% margin target would price at $80.
Which should I set — markup or margin? If you think in terms of "what did this cost me and what do I want to add," use markup. If you think in terms of "what percentage of each sale is profit," set margin instead and back into the price.
Why is my competitor's price lower than my markup formula suggests? They may have lower supplier costs, higher volume discounts, or be accepting a thinner margin intentionally. Use markup as a starting point, then adjust for market reality.
Should shipping and packaging be included in cost? Yes, if you're absorbing that cost. Any direct cost to get the product into the customer's hands should factor into your cost basis before applying markup.