40 Percent Markup Calculator

What to charge: a 40% markup in one step

Multiply your cost by 1.4. A $100 cost sells for $140, and $35.50 becomes $49.70. Your profit is always 40% of the cost, so $40 on that $100 item.

The last column is there because a lot of people who search for a 40% markup actually want a 40% margin. That needs a higher price, and the next part explains why.

Is a 40% markup a 40% margin? No, it is 28.6%

Markup is measured against your cost. Margin is measured against the selling price. The same $40 profit is 40% of the $100 cost but only 28.6% of the $140 price. Businesses that plan for "40% margins" while pricing at a 40% markup come up about 11 points short, and they usually find out at year end.

So a 50% markup is a 33.3% margin, and a 100% markup is a 50% margin. To get a real 40% margin you need a 66.7% markup, which means dividing your cost by 0.6. The table beside the calculator converts every common level. Use the 28.6% figure, not 40%, when you work out whether an ad budget pays for itself.

Working backwards: the price is known, what was the cost?

The solver above is a 40 markup calculator that runs in three directions, because this is the question that actually gets asked and it is the one most people get wrong. If a gaming system sells for $500, which is marked up 40%, the cost was not $300. Taking 40% off the price is the wrong move, because the 40% was added to the cost, not to the price.

Divide instead. 500 / 1.4 = $357.14, and the markup was the $142.86 difference. Check it the other way to be sure: $357.14 marked up by 40% is $500, which is where you started. Subtracting would have given $300, and $300 marked up by 40% is only $420.

The same three relationships cover every version of the question:

• Cost and markup known, find the price: multiply. cost × 1.4
• Price and markup known, find the cost: divide. price / 1.4
• Cost and price known, find the markup: (price − cost) / cost

That third one is how to calculate a 40% markup from figures you already have, and it is also the line where markup and margin part company. Divide the profit by the cost and you get the markup. Divide the same profit by the price and you get the margin. Same dollars, two different percentages, and mixing them up is the mistake that costs money rather than marks.

40 markup to margin, and 40 margin to markup

These two conversions get searched constantly, so here they are on their own. Going from 40 markup to margin: divide by what the price became. 40 / 140 = 28.6%. Going the other way, from 40 margin to markup: divide by what is left after the margin comes out. 40 / 60 = 66.7%.

So a 40% markup to margin is 28.6%, and a 40% margin needs a 66.7% markup. Every level in between is in the full markup vs margin comparison.

How to calculate a 40 markup when the numbers are messy

Real questions rarely hand you a single unit cost. A carton, a case or a job usually has to be broken down first, and the markup goes on after that, not before.

1. Get to one unit. A carton of 36 mixes that cost $43.20 is $1.20 each: 43.20 / 36. Mark up the unit, not the carton, if you sell them singly.
2. Add the costs that travel with it. Freight, duty and breakage belong in the cost before the markup. Leave them out and the markup quietly pays for them instead of paying you.
3. Apply the multiplier. $1.20 at a 40% mark up is 1.20 × 1.4 = $1.68.
4. Round last. Round the final price, never the multiplier. Rounding 1.4 to 1.5 partway through turns a 40% markup into 50%.

If the question asks for a 40% margin instead of a markup, step three changes: divide by 0.6 rather than multiplying by 1.4. So how do you calculate a 40% margin on that $1.20 unit? 1.20 / 0.6 = $2.00, not $1.68. The gap between those two prices, 32 cents on a $1.20 item, is the whole reason this page keeps coming back to the difference.

The Excel and Google Sheets formula

With your cost in cell A2 and the price in B2, these work the same in Excel and Google Sheets:

The mistake we see most is =A2*40%. That gives you the $40 profit, not the $140 price. Copy the formulas down the column and every row prices itself.

Markup calculator Excel template, free to download

If you are pricing more than a handful of items, a spreadsheet beats retyping into any calculator. This is a ready-made markup calculator Excel template with the formulas already in place:

Download the markup calculator template (.xlsx)

• Set the markup once. One cell drives all sixty rows, so changing 40% to 35% reprices the whole list.
• Type costs, read prices. Selling price, profit and the true margin fill themselves in.
• See both readings side by side. One column prices your percentage as a markup, the next prices it as a margin, and the last shows how many dollars apart they are.
• A conversion sheet covering every level from 5% to 200%, both directions.
• A notes sheet with each formula written out, in case you would rather build your own.

It is free for commercial use with no attribution asked. It opens in Excel and in LibreOffice, and for Google Sheets upload it to Drive and open it with Sheets: the formulas carry over unchanged.

How much can you discount a 40% markup?

Less than most people think. A discount comes off the selling price, and the selling price is bigger than your cost, so the same percentage takes away more money than the markup added.

• 40% markup, then 40% off: $100 becomes $140, then $84. You sell $16 below cost.
• 20% off: $140 becomes $112. You keep $12 of your $40 profit.
• 28.6% is the break-even discount. At that point you are back to $100 and make nothing. Anything deeper loses money on every sale.

Check a promotion before you run it with the discount percentage calculator.

Is 40% enough for your business?

Only if the cost you mark up is complete. Labor is the usual gap. Payroll taxes, workers' comp and benefits typically add 20 to 30% to raw wages, so a worker paid $28 an hour really costs $33.60 to $36.40. Mark up the raw $28 by 40% and you charge $39.20, keeping $2.80 to $5.60 an hour instead of the $11.20 you planned. Materials need freight, waste (often 2 to 5% in construction trades) and any import duties added before the markup. Build the full cost with the job costing calculator first.

Then compare with your trade. Keystone pricing, a 100% markup, is common in apparel and gift shops. Restaurants often price a dish at three to four times its food cost. Many contractors land somewhere between 15% and 50%, depending on the trade and their overhead. So 40% can be healthy in one business and far too thin in another. The real test is whether the margin it leaves covers your overhead with profit to spare, and the break-even calculator answers that.

When 40% breaks down at volume

Wholesale buyers expect price breaks. A 40% markup on a $50 unit is a $70 price. If a 500 unit buyer wants 20 to 25% off, you receive $52.50 to $56 a unit, and your margin falls from 28.6% to somewhere between 5 and 11%. At volume, either the markup goes up or the cost comes down. The wholesale price calculator handles tiered prices.

What this calculator does not cover

It prices one product from one cost. It does not handle a mix of products with different margins, returns and chargebacks, or card processing fees, which usually take 1.5 to 3.5% of each sale. It also ignores a supplier's minimum advertised price (MAP). If you plan to advertise below it, read the supplier's policy first, because many suppliers stop selling to retailers who do.

Related tools

Pricing jobs with overhead in the mix? Use the contractor markup calculator. Working back from a target margin: the job costing calculator. Product lines for resale: the wholesale price calculator.