Pricing
Price from cost and markup
The working form. Turn the percentage into a decimal, add one, and multiply by cost. A cost of 60 at a 40% markup gives 60 x 1.4 = 84.
The Formula
P = C x (1 + m)
The working form. Turn the percentage into a decimal, add one, and multiply by cost. A cost of 60 at a 40% markup gives 60 x 1.4 = 84.
| Symbol | Meaning | Unit | Notes |
|---|---|---|---|
| C | Cost of one unit | currency | What you pay to buy or make it. Decide separately whether tax and freight belong inside. |
| m | Markup as a decimal | decimal | 40% is written as 0.40. It is applied to cost, never to price. |
| P | Selling price | currency | Cost plus the markup in money terms. Equals 1.4 times cost when m is 0.40. |
What Each Symbol Means
Ccurrency
Cost of one unit
What you pay to buy or make it. Decide separately whether tax and freight belong inside.
mdecimal
Markup as a decimal
40% is written as 0.40. It is applied to cost, never to price.
Pcurrency
Selling price
Cost plus the markup in money terms. Equals 1.4 times cost when m is 0.40.
See It Worked With Real Numbers
A formula on its own does not tell you which number goes where. The how to calculate markup page applies this equation to a concrete case, shows every intermediate step, and names the mistakes that produce a wrong answer even when the algebra is right.
Where This Formula Appears
This equation is the working core of How To Calculate Markup, filed under Business. Every number the guide produces comes from substituting into this one line.