Key takeaway: Markup is the amount a seller adds to the cost of an item to get its selling price, usually written as a percent of the cost.
Grade 77.RP.A.3Ratios, Rates and Percents
Definition of Markup
Markup is the extra money a seller adds on top of what the item cost to buy or make. This added amount pays for rent, wages and other expenses, and whatever is left over is profit.
Because the extra charge is a percent of the cost, a higher cost means a bigger dollar amount added. The selling price is the cost plus that added amount, which is the same as the cost times one plus the rate. Stores, restaurants and online shops all price goods this way.
Formula and notation
With the rate \(r\) written as a decimal:
\[\text{amount added} = r \times \text{cost}, \qquad \text{selling price} = \text{cost} + \text{amount added}\]
In one step, \(\text{selling price} = \text{cost} \times (1 + r)\).
Key facts
- The percent is always taken from the cost, not from the selling price.
- A 60% rate means the selling price is 160% of the cost.
- The dollar amount added equals selling price minus cost.
- It points the opposite way from a discount: it raises the price.
Markup example
A food truck pays \$8.50 in ingredients and labor for each brisket sandwich and uses a 40% markup. Find the selling price.
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Markup in dollars: \(0.40 \times 8.50 = 3.40\).
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Add it to the cost: \(8.50 + 3.40 = 11.90\).
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Check with the one-step form: \(8.50 \times 1.40 = 11.90\).
The sandwich sells for \$11.90.
Common mistake
Watch out
Elena sees an \$11.90 sandwich with \$3.40 added to its cost and computes \(\frac{3.40}{11.90} \approx 28.6\%\) as the markup.
Why it is wrong
The rate is measured against the cost, not the selling price. The correct rate is \(\frac{3.40}{8.50} = 0.40\), or 40%. The 28.6% figure describes the extra amount as a share of the final price, which is a different quantity. When a problem says “percent markup”, the word “cost” tells you what goes under the fraction bar.
Related terms and lessons
Browse the glossary: A–Z list · Grade 7 vocabulary · Ratios, Rates and Percents