The Small Business Markup Calculator measures the percentage and dollar amount added to unit cost to reach a selling price. It also converts that markup into gross margin, helping prevent confusion between two percentages that use different denominators.
Businesses can use the tool to review existing prices or test a proposed markup. The result applies before overhead and other operating expenses unless those costs are included in the unit cost. For meaningful comparisons, use landed or fully allocated cost consistently across products.
1. Enter the complete unit cost used as the pricing basis.
2. Enter the current or proposed selling price.
3. Review dollar markup and markup percentage, which both compare price with cost.
4. Compare gross margin, which measures the same gross profit against selling price.
5. Repeat with adjusted cost or price to assess discounts and supplier cost changes.
Markup shows how much the price exceeds cost, while gross margin shows how much of the price remains after unit cost.
When unit cost is zero, percentage markup is undefined even though dollar gross profit and margin can still be displayed.
Given: Unit cost of $36 and selling price of $59.
Calculation: Dollar markup = $59 − $36 = $23. Markup = $23 ÷ $36 × 100 = 63.89%. Gross margin = $23 ÷ $59 × 100 = 38.98%.
Result: The price carries a 63.89% markup on cost and a 38.98% gross margin.
No. A 50% markup on $100 cost gives a $150 price and a 33.33% margin.
Use the cost basis that matches your pricing policy, such as purchase cost, landed cost, or fully allocated unit cost.
Yes. Selling below cost produces negative dollar markup, negative markup percentage, and negative gross margin.
Use the actual discounted selling price to see the realized markup rather than the list-price markup.
Not automatically. Gross profit from the markup must still cover payroll, rent, marketing, and other operating expenses.