Markup
Definition
How much you add to a product's cost to set its price, expressed as a percentage of cost. It is often confused with margin, which is a percentage of price.
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Formula
Markup % = (Price − Cost) ÷ Cost × 100Mixing up markup and margin is one of the most common pricing mistakes. A 50% markup is only a 33% margin, which may not cover fees and marketing.
Build prices from your target margin, then convert to markup if your team thinks that way. Watch for: markup applied to supplier price instead of full landed cost, which overstates real margins.
Example
A product costs $20 and sells for $50. Markup is 150%, while gross margin is 60% ($30 ÷ $50).