Pricing up from cost
Markup pricing is how most trading and product businesses set prices: take what you paid, add a percentage, sell. It is fast and it scales across a catalogue. Its weakness is that it ignores what the market will pay — it only knows what you spent.
The formula
Profit = Cost price × markup / 100
Selling price = Cost price + Profit
Margin = Profit ÷ Selling price × 100
Selling price = Cost price + Profit
Margin = Profit ÷ Selling price × 100
Worked example
₹700 cost with 40% markup
- Cost price
- ₹700.00
- Markup at 40%
- ₹280.00
- Selling price
- ₹980.00
- Resulting margin
- 28.57%
The markup was 40%. The margin is 28.57%. That gap is not a rounding difference — it is structural, and it widens as the percentage rises.
Choosing a markup
- Work backwards from the margin you need, not forwards from a number that sounds reasonable.
- Account for returns, damages and non-paying customers before you decide the number is enough.
- Remember that discounting eats markup faster than it eats revenue: 10% off a 40% markup removes a quarter of your profit.
Frequently asked questions
What markup do I need for a 50% margin?
100%. To keep half the selling price as profit, you have to double the cost.
Is markup the same as profit percentage?
Markup is profit as a percentage of cost. Profit margin is profit as a percentage of the selling price. They describe the same rupees against different denominators.
Should markup be applied before or after GST?
Before. Apply markup to your tax-exclusive cost to get a tax-exclusive selling price, then add GST on top.