Markup is the amount added to cost to set selling price, often expressed as a percentage of cost. A product with $40 cost sold at $100 has a 150% markup ($60 markup / $40 cost). Different from margin: that same product has a 60% margin ($60 profit / $100 revenue). Industries use markup conventions: retail often 100-200% markup; restaurants 200-400% markup on food. Service-based pricing often uses bill rate / cost rate. The math: Margin = Markup / (1 + Markup). A 100% markup = 50% margin. Many small businesses use markup pricing because it's intuitive but underestimate true profitability margins.
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Markup
August 22, 2026 · Aditya Gupta
Accounting
Related terms
Accounts Payable
Accounts Payable (A/P) is money a company owes to suppliers for goods or services received but not yet…
Accounts Receivable
Accounts Receivable (A/R) is money owed to a company by customers for goods or services delivered on credit.…
Accrual Accounting
Accrual accounting recognizes revenues when earned (regardless of cash receipt) and expenses when incurred (regardless of cash payment)…
Accrued Expense
An accrued expense is a cost recognized in the income statement before cash is paid — recorded as…
Amortization
Amortization is the systematic allocation of intangible asset cost over its useful life — analogous to depreciation but…
Audit
An audit is an independent examination of a company's financial records, internal controls, and statements — typically conducted…
