The markup calculator alternatively spelled as "mark up calculator" is a business tool most often used to calculate your sale price. Just enter the cost and markup, and the price you should charge will be computed instantly. It can also be used to calculate the cost - in this case, provide your revenue and markup. If you would like a markup percentage calculator, then just provide the cost and revenue. Keep on reading to find out what is markup, how to calculate markup and what is the difference between margin vs markup.
Perhaps the plain old VAT calculator and sales tax calculator are to your liking. Don't forget, our markdown calculator does a nifty thing - it shows you what markup or margin you need to set your product at if you want to be able to give a certain discount to a customer, while still maintain a desired level of profitability. The margin with discount is especially helpful when you want to negotiate a price with the customer.
Free your mind of math and focus on doing business! The basic rule of a successful business model is to sell a product or service for more than it costs to produce or provide it.
The difference between the cost of a product or service and its sale price is called the markup or markon. As a general guideline, markup must be set in such a way as to be able to produce a reasonable profit. The markup price can be calculated in your local currency or as a percentage of either cost or selling price. In our calculator, the markup formula describes the ratio of the profit made to the cost paid. Profit is a difference between the revenue and the cost.
Now that you know what the markup definition is, keep in mind that it is easy to confuse markup with profit margin. Profit margin is a ratio of profit to revenue as opposed to markup's ratio of profit to cost. The profit margin allows you to compare your profit to the sale price, not the purchase price. This is a simple percent increase formula. When you don't know the profit, but only know how much we paid for an item cost and sold it for revenue , we simply substitute profit for the formula for profit.
This is probably the most common scenario - you know how much you paid for something and your desired markup, and therefore want to find the sale price.
Go ahead and try to enter different numbers into the markup calculator! Fill in any two fields, and the remaining ones will be automatically calculated. One of the most common pricing strategies, the so-called cost-plus pricing , is based on a specific rate of markup that is typical for the particular industry.
In this strategy, the entrepreneur or the company determines the price of its products by a percentage markup on unit costs. Therefore, the markup formula is the following:. The reason for the simplicity of this approach is that the markup percentage is set according to what is common in the industry, habits of the company, or rules of thumb.
Besides, the price depends only on the markup and the cost of the unit. It disregards any other factors, such as a shift in demand.
Therefore, any change in the cost of the unit leads directly to a proportional shift in price. Merely relying on the typical markup rate and unit costs doesn't require extensive research or analysis which makes the approach very popular: around 75 percent of companies employ a cost-plus pricing method. However, the cost-based approach can have severe disadvantages if the consumers' behavior is neglected.
To illustrate this, let's imagine that you make umbrellas. To determine his markup percentage, he uses the formula:. Abram inputs his numbers. He includes 75 as his selling price and 50 as his cost. The deli owner solves by order of operations. Aram solves for the difference between 75 and 50, getting He divides it by 50, getting.
To change the decimal to a percentage, Abram multiplies it by The above example is the most common way the formula is used. However, variables change in more advanced situations, depending on the figure being sought after. A mid-sized computer accessories manufacturer just received an order for headsets and 50 keyboards. To use the formula, Radha needs to calculate the order's total cost.
She begins with the keyboards as they require the added technology. To discover the total cost of the keyboards, she has to multiply:. She now has to find the cost of the headsets.
The order requires headsets with no additional technology requirement. To discover the total cost of the headsets, Radha has to multiply:. To find the total cost of the order, Radha has to add both totals. To make the final calculation, Radha separates her process into steps:. Input cost amount: Radha uses the formula to input her information. Multiply both sides by To balance the equation, Radha mimics what she does on one side on the other. Multiply both sides by With the problem simplified, Radha multiplies again.
Add 7, to both sides: With the problem simplified further, Radha adds. Find jobs. You can decline analytics cookies and navigate our website, however cookies must be consented to and enabled prior to using the FreshBooks platform.
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This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. Review our cookies information for more details. Agree Disagree. Select your regional site here:. Markup Calculator for Small Businesses. Enter your markup information. To get started, enter two of the fields below and we will automatically calculate the rest. FreshBooks accounting software makes it easy to pull in all of the information needed to calculate your ideal markup price, including: Product costs Markup percentage Margins Revenue Profit Once you have this information, simply plug it into the free Markup Calculator to calculate markup in a matter of seconds.
Use the FreshBooks Markup Calculator to: Add up the true cost of your products manufacturing, packaging, shipping, etc. What is the Formula to Calculate Markup Price? What is a Good Markup Percentage?
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