How to use it
- Pick one of the four modes, depending on what you already know.
- Enter cost, price, markup or target margin as needed.
- Look at the markup-to-margin table under the calculator to sanity-check the result.
The markup formula
Selling price = Cost × (1 + Markup %)Markup % = (Price − Cost) ÷ Cost × 100A part that costs $32 with a 60% markup sells for 32 × 1.6 = $51.20. The $19.20 profit is 60% of cost but only 37.5% of the price.
Setting a markup that covers overhead
A markup has to pay for more than the item. A simple way to find a floor:
- Add up a year of overhead: rent, software, insurance, salaries not tied to specific jobs.
- Divide it by your expected yearly direct costs. That ratio is the markup needed just to break even.
- Add the profit you want on top.
Say overhead is $60,000 and you expect $150,000 in direct costs. Break-even markup is 40%. To earn another 15% of cost as profit, price at a 55% markup or higher.
Rough markup ranges by business type
| Business | Common markup |
|---|---|
| Grocery | 15%–30% |
| Consumer electronics | 10%–35% |
| Clothing and accessories | 80%–150% |
| Furniture | 80%–200% |
| Restaurant food | 200%–300% on ingredients |
| Construction and trades | 15%–50% on materials and subs |
These ranges are only a rough guide. Your own costs and competitors set the real limits.
Next steps
Once the price is set, put it on a quote or estimate, and invoice it with the invoice template.