What markup do I need for a given margin?

Divide the margin by one minus the margin. For a 40% margin: 0.40 ÷ 0.60 = 0.667, so a 66.7% markup. For a 50% margin you need to double the cost.

Can markup go above 100%?

Yes, and often does. A 200% markup triples the cost. Margin, by contrast, can never reach 100% while the item costs anything at all.

Should markup cover my overheads?

It has to. Markup applied to the direct cost is what pays for rent, wages, tools and unbilled hours. A markup set only against material cost is how contracting businesses lose money while staying busy.

Money

Markup Calculator

Enter your cost and the markup you want to apply to get the price to charge.

The formula

profit = cost × markup ÷ 100

price = cost + profit

margin % = profit ÷ price × 100

Worked example

A $60 item with a 66.67% markup

60 × 0.6667 = 40 profit
60 + 40 = $100 selling price
40 ÷ 100 = 40% margin

Where this goes wrong

Applying a target margin as a markup

Wanting a 40% margin and adding 40% to cost gives you a 28.6% margin, not 40%. To reach a 40% margin you have to add about 67% to the cost. The gap widens as the target rises, so the mistake costs most on the products meant to earn most.

Questions

What markup do I need for a given margin?: Divide the margin by one minus the margin. For a 40% margin: 0.40 ÷ 0.60 = 0.667, so a 66.7% markup. For a 50% margin you need to double the cost.
Can markup go above 100%?: Yes, and often does. A 200% markup triples the cost. Margin, by contrast, can never reach 100% while the item costs anything at all.
Should markup cover my overheads?: It has to. Markup applied to the direct cost is what pays for rent, wages, tools and unbilled hours. A markup set only against material cost is how contracting businesses lose money while staying busy.