Markup

Markup is the amount added to a product's cost to set its selling price. A percentage markup is calculated against cost: an item costing £10 and sold for £15 has a 50% markup.

The formula is markup percentage = (selling price − cost) ÷ cost × 100. Cost needs a consistent definition, such as landed product cost, and comparisons should use the same tax basis. Markup describes pricing relative to cost; it does not say what proportion of sales revenue remains after the cost of goods.

For example, adding a 25% markup to a £20 cost produces a £25 selling price. The £5 gross profit is 20% of £25, so the gross margin is 20%. Keystone pricing uses a 100% markup, which produces a 50% gross margin before other expenses.