# Markup Calculator

Markup is a ratio of **profit to cost** expressed as a percentage. Profit is a difference between the revenue and the cost. For example, when you buy something for `$80`

and sell it for $100, your profit is $20. The ratio of profit ($20) to cost ($80) is 25%.

## How to calculate markup?

The formula for markup is as follows: `markup = 100 * profit / cost`

. We multiply by 100 because we express it as a percentage, not as a fraction (`25%`

is the same as `0.25`

or `1/4`

or `20/80`

).

When you don't know the profit, only how much we bought something for (cost) and sold it for (revenue), we simply substitute profit for the formula for profit. `Profit = revenue - cost`

, so `markup = 100 * (revenue - cost) / cost`

.

Go ahead and try to enter different numbers into the markup calculator above. Fill in any two fields and the 3rd one will be automatically calculated.

## Markup vs. profit margin

It is easy to confuse markup with profit margin. Profit margin is a ratio of **profit to revenue** as opposed to markup's ratio of **profit to cost**. With profit margin, you compare your profit to the selling price, not the purchase price. In our example, we would compare $20 to $100, so profit margin equals 20%.