Pricing · markup guide
40% markup: margin and selling price
A 40% markup means the selling price is your cost plus 40% of that cost, so you multiply the cost by 1.4. It gives a profit margin of 28.57%, because the profit is measured against the higher selling price. An item that costs £100 sells for £140.00 and makes £40.00 profit.
VAT rate checked against GOV.UK on .
Profit margin
28.57%
from a 40% markup
Multiply cost by
1.4
to get the price ex VAT
Price on £100 cost
£140.00
before VAT
With 20% VAT
× 1.68
cost to shelf price
Selling prices with a 40% markup
Price with VAT assumes you are VAT registered and the item is standard-rated at 20%.
| Cost | Selling price | Profit | Price with VAT |
|---|---|---|---|
| £1.00 | £1.40 | £0.40 | £1.68 |
| £5.00 | £7.00 | £2.00 | £8.40 |
| £10.00 | £14.00 | £4.00 | £16.80 |
| £25.00 | £35.00 | £10.00 | £42.00 |
| £50.00 | £70.00 | £20.00 | £84.00 |
| £100.00 | £140.00 | £40.00 | £168.00 |
| £250.00 | £350.00 | £100.00 | £420.00 |
| £1,000.00 | £1,400.00 | £400.00 | £1,680.00 |
Nearby markups
Markup, the margin it gives and the multiplier to use on your cost.
| Markup | Margin | Multiplier |
|---|---|---|
| 20% | 16.67% | × 1.2 |
| 25% | 20% | × 1.25 |
| 30% | 23.08% | × 1.3 |
| 35% | 25.93% | × 1.35 |
| 45% | 31.03% | × 1.45 |
| 50% | 33.33% | × 1.5 |
| 55% | 35.48% | × 1.55 |
| 60% | 37.5% | × 1.6 |
Markup is not the same as margin
People often mix these up. A 40% markup is a 28.57% margin. If you actually want a 40% margin, you need a markup of 66.67%, so the price is cost × 1.6667.
How far you can discount
With a 40% markup you can take up to 28.57% off the selling price before you are selling at cost. A 10% discount leaves a margin of 20.63%, and 20% off leaves 10.71%.
Adding VAT
If you are VAT registered and sell at the 20% standard rate, add VAT after the markup. That makes the shelf price cost × 1.68. The VAT goes to HMRC, so it does not change your 28.57% margin.
Profit in each pound of sales
Gross profit is between a quarter and a third of each pound you take before VAT, and the goods cost you the other 71p. After a 10% discount you would need to sell about 54% more units to make the same gross profit as at full price.
How far apart the markup and margin are
The two figures drift further apart as the markup rises: the margin is 11.43 percentage points below the markup. On a £100 cost, pricing for a true 40% margin would mean charging £166.67 instead of £140.00. Another 10 points of markup would add 4.76 percentage points of margin.
Other markups
- 25% markup (20% margin)
- 30% markup (23.08% margin)
- 35% markup (25.93% margin)
- 45% markup (31.03% margin)
- 50% markup (33.33% margin)
- 55% markup (35.48% margin)
Common questions
What margin is a 40% markup?
28.57%. Divide the markup by 100 plus the markup: 40 ÷ 140 = 28.57%.
How do I add a 40% markup to a price?
Multiply the cost by 1.4. For example, £40 × 1.4 = £56.00. In Excel or Google Sheets, with the cost in A2, use =A2*1.4.
What is a 40% markup on £100?
£40 of profit, so the selling price is £140.00 before VAT, or £168.00 with 20% VAT added.
How do I work out the cost from a price with a 40% markup?
Divide the selling price by 1.4. A price of £60 means a cost of £42.86. If the price includes 20% VAT, divide by 1.2 first.
Sources and assumptions
- Markup = profit ÷ cost. Margin = profit ÷ selling price. Both use prices before VAT.
- Cost means what you pay for the item, excluding any VAT you can reclaim.
Figures are rounded to the nearest penny or to two decimal places.