Markup is the amount added to a product’s cost to set its selling price, expressed in currency or as a percentage of cost.
How it works in retail
Markup percentage equals selling price minus cost, divided by cost, multiplied by 100. The cost basis should be stated, especially when freight or duties are included.
A retail example
An item costing $40 is priced at $60. The markup is $20, or 50% of cost, while gross margin is about 33.3% of selling price.
What to keep in mind
A 50% markup is not a 50% margin. Confusing the two can produce prices that fall short of a retailer’s intended margin.
Examples are illustrative. Terminology and measurement conventions can vary by business and market.