Markup on cost is the most common way small retailers and wholesalers set prices — straightforward, but worth calculating carefully rather than by rough instinct.
The formula
Markup on cost % = (Selling price − Cost) ÷ Cost x 100. To hit a specific target, work it backwards: Selling price = Cost x (1 + Target markup %).
Setting a markup that actually protects margin
- Include the full landed cost — product cost plus shipping, duties, and handling — not just the wholesale price you paid
- Build in a buffer for expected returns or damaged inventory in categories where that’s a meaningful factor
- Revisit markup targets when supplier costs change, rather than only when you’re setting prices on a brand new product
The risk of underpricing
A markup calculated only on product cost, without accounting for overhead and operating expenses, can look profitable per unit while the business as a whole still loses money — markup on cost protects per-item margin, not automatically overall profitability.