Pricing is one of those things every retailer does constantly, and few actually enjoy calculating. Markup percentage tells you how much you’re adding on top of your cost to arrive at your selling price — and getting it right (and fast) matters more in Q4 than any other time of year, when you’re pricing new seasonal stock in bulk. Getting your pricing right also protects the value of the stock sitting on your books as a current asset — underpriced or inconsistently priced inventory erodes that value before it even sells.

The markup formula

Here’s how to calculate markup percentage: Markup percentage = (Selling Price − Cost) ÷ Cost × 100

Say you buy a product for $20 and sell it for $35:

($35 − $20) ÷ $20 × 100 = 75% markup

That’s it — that’s the whole formula. Where retailers get tripped up is confusing markup with margin, which are related but not the same number.

Markup vs. margin — the distinction that trips everyone up

Markup is calculated against cost. Margin is calculated against selling price. Using the same example above:

• Markup: ($35 − $20) ÷ $20 = 75%
• Margin: ($35 − $20) ÷ $35 = 42.9%

Same product, same dollars, two very different percentages. If you’ve ever pulled up two reports that seemed to disagree on your profitability, this is usually why. Know which one you’re looking at before you make a pricing decision off it.

A faster way to think about it

If you’re trying to find your markup percentage in reverse — starting from a target instead of a price — you can flip the markup formula to solve for price instead of checking it after the fact:

Selling Price = Cost × (1 + Markup %)

A $20 item at a target 75% markup: $20 × 1.75 = $35. This is the version most retailers actually use day to day — not calculating markup after setting a price, but setting the price to hit a markup target from the start.

Where this gets tedious — and where it doesn’t have to

The math itself is simple. What’s tedious is doing it a hundred times over for a new seasonal order, especially with mixed cost tiers, vendor discounts, and rounding to clean price points ($34.99 instead of $35.00). This is the exact spot where spreadsheets get abandoned mid-order and retailers fall back on “that feels about right” pricing — which is how margin quietly erodes over a season without anyone noticing until the numbers come in low.

A quick sanity check before Q4 buying

Before placing bulk holiday orders, pick a target markup by category (many independent retailers land somewhere between 50–100% depending on the category and competitive pressure) and price against that target consistently, rather than recalculating from scratch on every SKU. Consistency across a category protects your margin far more reliably than getting each item “perfectly” priced.

Whatever markup target you settle on, it should feed directly into your seasonal buying numbers — that consistent target is one of the inputs behind an accurate open-to-buy plan, not a separate exercise from it.

If pricing a full seasonal order by hand is eating hours you don’t have this time of year, that’s exactly the kind of repetitive work 360 RM helps retailers automate through POS and pricing rule setup — so the markup target gets applied consistently without the manual math.

Related reading: Open-to-Buy Explained · Is Inventory a Current Asset?