Markup is the difference between the cost of making or purchasing an item for sale and the price at which you sell it. In dollar terms, it represents your gross profit on the sale of a single unit of the item. You can also express the markup as a percentage of the cost price. The markup percentage you choose depends on the type of industry you're in; you need to set your prices at a comparable level to similar suppliers or retailers to remain competitive.
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Calculate the markup as a dollar amount by deducting the cost of the item from your selling price. For example, if it costs you $100 to make a table and you sell it for $175, your markup is $175 less $100 and equals $75. This is also your gross profit on each table.
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Divide the gross profit by the cost and multiply by 100 to calculate your percentage markup. In the example, divide $75 by $100 which equals $0.75, and multiply by 100 to give you 75 percent. Your markup on cost price is 75 percent.
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Calculate the selling price of an item by adding the desired markup percentage to the cost price. If a chair costs you $60 to make and you want to achieve a markup of 75 percent on your furniture, multiply $60 by 0.75 or 75 percent to obtain a markup in dollars, equivalent to the gross profit, of $45. Add this to the cost of the chair to arrive at the selling price of $105. Alternatively, multiply $60 by 1.75 to obtain the same result.
