Goods often get marked up twice — manufacturer to wholesaler, wholesaler to retailer. Chain the markups to see the final shelf price, and the total markup from original cost.
(1 + markup) stacks on the previous price. Multiplying them chains the markups to the final retail price.
The example
$10 cost, 40% wholesale markup, then 50% retail markup.
| A | B | |
|---|---|---|
| 1 | Stage | Price |
| 2 | Cost | $10.00 |
| 3 | Wholesale (+40%) | $14.00 |
| 4 | Retail (+50%) | $21.00 |
The formula
Final retail price from cost:
How it works
Markups compound, just like interest:
- Each stage multiplies the previous price by
(1 + markup). - Chaining them —
cost × (1+m1) × (1+m2)— gives the final price after both markups. - The total markup from cost is
finalPrice/cost − 1— here 110%, not 90%, because the second markup applies to the already-marked-up price. - Add more stages by multiplying in another
(1 + markup)factor.
Markups don’t add. 40% then 50% is not 90% — it’s 110%, because the second markup is taken on the higher price. Adding the percentages is the classic pricing mistake.
Try it: interactive demo
Set cost and two markups.
Variations
Total markup from cost
Combined effect:
Three-stage chain
Add another factor:
Back out the cost
From retail price:
Pitfalls & errors
Don’t add markups. Multiply the (1+markup) factors; adding percentages understates the final price.
Markup vs margin. These are markups on cost. If a stage quotes a margin on price instead, convert it first.
Round only at the end. Rounding each stage can drift the final price; keep precision until the last step.
Practice workbook
Frequently asked questions
How do I chain two markups in Excel?
Why isn't a 40% then 50% markup equal to 90%?
How do I find the original cost from a retail price?
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