Markup and Selling Price: Common Mistakes, Tips and FAQs

Introduction

Business and employment calculations are full of terms that sound alike but mean different things, such as margin and markup.

This article covers the most common mistakes people make with markup and Selling Price, what really moves the result, and answers to the questions we hear most often.

Why it matters

Clear numbers help you price profitably, chase late invoices with confidence and understand statutory pay entitlements.

How it's calculated

Selling price = cost × (1 + markup ÷ 100). The resulting margin is profit ÷ selling price.

What changes the result most

We raised each input by 10% on its own, starting from a typical example where selling price is £90.00. Here's what happened:

• Raising cost from £60 to £66 changes selling price to £99.00 (+10.0%).
• Raising markup from 50 % to 55 % changes selling price to £93.00 (+3.3%).

Focus first on cost, which has the biggest effect in this example.

Common mistakes to avoid

1. Confusing margin and markup when setting prices.
2. Leaving VAT inside revenue figures when calculating profit.
3. Not claiming late payment compensation you're entitled to.
4. Using out-of-date statutory pay or minimum wage rates.

A quick example

With the inputs below, selling price comes out at £90.00.

Tips

• Price from margin, not markup, if you want to hit a target profit percentage.
• Quote prices to businesses ex VAT and to consumers inc VAT.
• You can legally claim statutory interest on late B2B invoices.
• Statutory pay rates usually change every April – check GOV.UK.

Frequently asked questions

What's the quickest way to work out markup and Selling Price?

Use our free markup Calculator. It applies this method automatically: Selling price = cost × (1 + markup ÷ 100). The resulting margin is profit ÷ selling price.

Are statutory pay figures up to date?

Rates are editable on each calculator. Defaults reflect recent published rates; always confirm current figures on GOV.UK.

Do these work for sole traders?

Yes. Margin, markup and break-even apply to any business size.

Is this legal advice?

No. For disputes about pay, redundancy or debts, contact Acas, Citizens Advice or a solicitor.

Related calculators

• Profit Margin Calculator
• Break-Even Calculator
• ROI Calculator
• Discount Calculator
• Late Payment Interest Calculator
• Redundancy Pay Calculator

For the full method, read How to Calculate Markup and Selling Price in the UK: Step-by-Step Guide.