The Markup On Cost Formula is an important tool for businesses to understand the relationship between cost and price. It’s calculated by dividing the markup amount with the original cost to get a percentage amount that can be added to the product or service’s cost to determine its new, selling price. This formula helps business owners decide on the pricing strategy for their products or services and it enables them to make better decisions about how much mark up (or margin) to set in order to increase profits without compromising customer satisfaction. With the Markup On Cost Formula, businesses are able to maximize their profits while ensuring their customers get the best value.