Pricing Strategy
Markup Calculator
Set a selling price from your cost and a target markup percentage. Convert easily between markup and margin.
add_chartCost & Markup
Markup is profit as a percentage of cost.
paidPrice Breakdown
Recommended Selling Price
£70.00
Unit Cost£50.00
Profit per Unit£20.00
Equivalent Margin28.57%
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Know Your Cost
Capture all unit costs including landed shipping, packaging and direct labour.
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Choose Markup
Pick a markup that meets your target margin and is competitive in your market.
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Sell Confidently
Apply the recommended price knowing exactly what profit each sale brings in.
Common Questions
What's the difference between markup and margin?expand_more
Markup expresses profit as a percentage of cost; margin expresses it as a percentage of selling price. A 50% markup is only a 33% margin. Quick conversions: 25% markup = 20% margin, 50% markup = 33% margin, 100% markup = 50% margin. Confusing the two is one of the most common pricing errors — using 'margin' when you mean 'markup' undercharges by a noticeable amount.
Should I include VAT in my markup?expand_more
No. Always set markup on the net (excl. VAT) cost, then add VAT to the customer-facing price separately on the invoice. Mixing them confuses your accounts and can lead to under-pricing if you're VAT-registered. The exception is consumer-facing retail where you display gross prices — you still mark up on net internally, just present the VAT-inclusive figure on the shelf.
What markup do I need to actually be profitable?expand_more
Cost-of-goods markup alone doesn't make a business profitable — you also need to cover overhead (rent, salaries, marketing, software). A useful rule: take your annual overhead, divide by expected unit sales, add that 'overhead per unit' to your direct cost, then apply your target profit markup on top. Many small retailers under-price because they only mark up on cost of goods and forget overhead absorption.
How do I price for different customer segments?expand_more
Tiered markup is normal: trade/wholesale customers might pay cost + 30%, retail walk-ins cost + 100%, online direct cost + 80% (to cover platform fees). Set a published RRP at your highest markup and offer % discounts off that — it lets you flex without re-pricing constantly and protects perceived value.
When should I raise prices?expand_more
Most UK SMBs under-raise prices and erode margin via inflation creep. Review markup at least annually against: supplier cost increases, your own labour cost (real living wage rose ~10% over recent years), competitor pricing, and value delivered. A 5% price increase typically improves net profit by 25–50% because overhead is largely fixed — far more than chasing 5% extra volume.