{"id":227,"date":"2026-07-09T21:53:45","date_gmt":"2026-07-09T21:53:45","guid":{"rendered":"https:\/\/bizmargin.com\/blog\/?p=227"},"modified":"2026-07-21T10:36:35","modified_gmt":"2026-07-21T10:36:35","slug":"percentage-markup-based-on-selling-price","status":"publish","type":"post","link":"https:\/\/bizmargin.com\/blog\/retail-markup\/percentage-markup-based-on-selling-price\/","title":{"rendered":"How to Calculate Percentage Markup Based on Selling Price"},"content":{"rendered":"

Markup based on selling price (also called margin-based markup) tells you what percentage of your final sale price is profit \u2014 a different calculation than markup based on cost, and easy to confuse with it.<\/p>\n

The formula<\/h2>\n

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.<\/p>\n

Why this differs from markup on cost<\/h2>\n

The same product also has a 150% markup on cost \u2014 (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.<\/p>\n

Which one to use<\/h2>\n

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.<\/p>\n

Markup on selling price vs. markup on cost<\/h2>\n

Most markup calculations use cost as the base, but some industries — food service is the classic example — calculate markup as a percentage of the selling price instead. Formula: Markup on selling price % = (Selling Price − Cost) ÷ Selling Price × 100. This is mathematically identical to a gross margin calculation, which is exactly why it causes confusion: a “40% markup” quoted this way is not the same number as a 40% markup on cost.<\/p>\n

A worked example<\/h2>\n

Cost $18, selling price $30. Markup on cost: (30 − 18) ÷ 18 × 100 = 66.7%. Markup on selling price: (30 − 18) ÷ 30 × 100 = 40%. Same transaction, two very different-looking percentages depending on which base is used — and both are technically correct calculations, just answering different questions.<\/p>\n

Why this matters in practice<\/h2>\n

Restaurants commonly track “food cost percentage,” which is really cost as a percentage of selling price — the inverse framing of markup on selling price. A target 30% food cost is the same thing as a 70% markup on selling price, or roughly a 233% markup on cost. Knowing which convention an industry or a specific supplier contract uses prevents a significant pricing error.<\/p>\n

Common mistakes<\/h2>\n