What is markup?
Markup is the amount added to the cost of a product to arrive at its selling price, expressed as a percentage of cost. It is the simplest pricing method and the one most Indian traders, kirana stores, hardware dealers and job-work units use every day: "I buy at ₹100 and sell at ₹130" is a 30% markup.
Formula
- Selling Price = Cost × (1 + Markup %)
- Markup % = (Selling Price − Cost) ÷ Cost × 100
- Margin from markup = Markup ÷ (1 + Markup)
- Markup from margin = Margin ÷ (1 − Margin)
Worked example
A pharmacy buys a medicine strip at ₹500 and the standard trade markup is 40%. Selling price = 500 × 1.40 = ₹700. Profit is ₹200. But as a percentage of the ₹700 selling price that profit is only 28.57% — the margin. If the pharmacy owner reports "we make 40%" to his CA, the CA will record a 28.57% gross margin in the books. Both are correct; they are simply measured on different bases.
Markup ↔ margin conversion table
The calculator prints a ready reckoner: 25% markup = 20% margin, 33.33% markup = 25% margin, 50% markup = 33.33% margin, 100% markup = 50% margin. Keep it handy when negotiating with distributors who quote markup while your target sheet is in margin terms.
Three modes
- Price from cost + markup — the everyday pricing question
- Markup from cost and price — reverse-engineer a competitor's or MRP-based markup
- Convert markup ↔ margin — translate between the two languages instantly
Practical notes
Use GST-exclusive cost (net of input tax credit) and GST-exclusive price. If you must sell at a printed MRP, strip the GST out first (MRP ÷ 1.18 for 18% goods) before computing your markup. For cost-plus contracts, government tenders and job work, the agreed markup is often 10–15% on cost; this tool quickly shows what that means in rupee terms and what margin it translates to for your financial statements.
Frequently Asked Questions
Is markup the same as profit margin?
No. Markup is profit as a percentage of cost; margin is profit as a percentage of selling price. For the same sale, markup is always the larger number.
What markup should I keep to get a 30% margin?
Markup = 0.30 ÷ (1 − 0.30) = 42.86%. Multiply cost by 1.4286 to price for a 30% margin.
How do I calculate markup from MRP?
First remove GST from the MRP (MRP ÷ 1.18 for 18% goods), then markup % = (net price − cost) ÷ cost × 100.
Can markup be more than 100%?
Yes. Jewellery making charges, handicrafts, software and luxury goods often carry 100–300% markup. Margin, however, can never exceed 100%.
Disclaimer: This tool is for general information and estimation only. Tax rates and rules change — verify with official sources or a professional before acting. Read full disclaimer.