Markup: what it is and how to price with it
Markup is the multiplier applied to an item's cost to reach the selling price, covering costs and the desired margin — for example, a 3x markup on a C$10 cost gives a C$30 price.
How to use markup
Set a markup that covers ingredients, overhead and profit. Price = cost × markup. It's a fast way to price the menu, but check it against each dish's real margin.
- Selling price = cost × markup
- Covers cost, overhead and profit
- Fast for pricing the menu
Markup vs margin
Markup is on cost; margin is on the sale. A 3x markup (cost C$10 → price C$30) equals a ~67% gross margin. Don't confuse the two when pricing.
FAQ
Are markup and margin the same?
No. Markup is calculated on cost; margin on the selling price. A 100% markup is a 50% margin.
What markup should a restaurant use?
It depends on the target food cost. At 30% food cost, markup is ~3.3x. Always check against the dish's real margin.