What is Markup?
Nexa Consultancy | Startup & Finance Glossary
Markup is the amount a company adds to the cost of a product to determine its selling price. It is typically expressed as a percentage of the cost. Markup is different from gross margin, which is a percentage of the revenue.
For Startups: For D2C and retail startups, setting the right markup is a key pricing decision. The markup needs to be high enough to cover all operating expenses and generate a profit, while still being competitive in the market. A common strategy is to use a "keystone" markup, which means doubling the cost price (a 100% markup).
Calculation: Markup % = ((Selling Price - Cost) / Cost) * 100.
Example: A product costs ₹500 to produce and is sold for ₹800. The markup is ₹300. The markup percentage is (300 / 500) * 100 = 60%.