Markup based on selling price (also called margin-based markup) tells you what percentage of your final sale price is profit — a different calculation than markup based on cost, and easy to confuse with it.
The formula
Markup on selling price = (Selling price minus cost) divided by selling price, times 100. A product that costs $40 and sells for $100 has a 60% markup on selling price.
Why this differs from markup on cost
The same product also has a 150% markup on cost — (Selling price minus cost) divided by cost. Same numbers, very different-looking percentage, which is exactly why mixing up the two methods leads to real pricing errors.
Which one to use
Markup on selling price is mathematically identical to gross margin percentage, which makes it useful for comparing directly against your margin targets. Markup on cost is more common in retail and wholesale pricing conversations, since it starts from what you actually paid. Know which one you’re using before quoting or comparing numbers with anyone else.