Setting a markup price means deciding how much to add on top of your cost to reach a selling price — the mechanical step comes after you’ve already decided your target markup percentage.
The basic calculation
Selling price = Cost x (1 + Markup percentage). A product costing $25 with a target 100% markup: $25 x 2 = $50 selling price.
Where the target markup percentage comes from
- Industry norms for your category — markup expectations vary significantly between, say, apparel and electronics
- Your actual overhead and operating costs, not just the product cost, since markup needs to cover more than just replacing inventory
- Competitor pricing, as a sanity check rather than the primary driver
A common mistake
Setting markup based only on product cost while ignoring shipping, packaging, payment processing fees, and returns understates your true cost basis — and the markup calculated on an incomplete cost figure won’t actually deliver the margin you think it will.