How to calculate it
Markup % = (price − cost) ÷ cost × 100
To find a price from a cost: price = cost × (1 + markup %).
Example
Illustrative numbers only. A part costs you $60 and you sell it for $90. The markup is ($90 − $60) ÷ $60 = 50%. The gross margin on the same sale is ($90 − $60) ÷ $90 = 33.3%.
Markup versus margin
The same dollars give two different percentages because they are measured against different bases: markup against what you paid, margin against what the customer pays. If you want a particular margin, the markup has to be higher than that number. A 40% margin needs a markup of about 67%, not 40%.
Why it matters
Parts and materials carry handling, warranty exposure and the cost of carrying stock, so selling them at cost loses money. A consistent markup, kept in a price book, keeps that recovery the same on every job.
Related
Definitions here are general and educational. Exact meanings can vary by trade, region, and software.