See Also:

Margin vs Markup

Margin Percentage Calculation

Retail Markup

Gross Profit Margin Ratio Analysis

Operating Profit Margin Ratio Analysis

# Markup Percentage Definition

Define the markup percentage as the increase on the cost price. The markup sales are expressed as a percentage increase as to try and ensure that a company can receive the proper amount of gross profit. Furthermore, markups are normally used in retail or wholesale business as it is an easy way to price items when a store contains several different goods. Now, look at the markup percentage calculation.

*intentionally*pricing for profit, then you’re missing out on some opportunities for

**big improvements**. Click here to download your free Pricing for Profit Inspection Guide now.

## How to Calculate Markup Percentage

By definition, the markup percentage calculation is cost X markup percentage. Then add that to the original unit cost to arrive at the sales price. The markup equation or markup formula is given below in several different formats. For example, if a product costs $100, then the selling price with a 25% markup would be $125.

Gross Profit = Sales Price – Unit Cost = $125 – $100 = $25

Now that you have found the gross profit, let’s look at the markup percentage calculation:

**Markup Percentage = Gross Profit/Unit Cost = $25/$100 = 25%**

The purpose of markup percentage is to find the ideal sales price for your products and/or services. Use the following formula to calculate sales price:

Sales Price = Cost X Markup Percentage + Cost = $100 X 25% + $100 = $125

As with most things, there are good and bad things about using markup percentage. One of the pitfalls in using the markup percentage to calculate your prices is that it is difficult to ensure that you have taken into consideration all of your costs. By using a simple rule of thumb calculation, you often miss out on indirect costs.

**NOTE: Want the Pricing for Profit Inspection Guide?**

**It walks you through a step-by-step process to maximizing your profits on each sale. Get it here!)**

## Markup Percentage Calculation Example

For example, Glen started a company that specializes in the setup of office computers and software. He decided that he would like to earn a markup percentage of 20% over the cost of the computers to ensure that he makes the proper amount of profit. Furthermore, Glen has recently received a job to set up a large office space. He estimates that he will need 25 computers at a cost of $600 a piece. In addition, Glen will need to set up the company software in the building. The cost of the software to run all the computers is around $2,000. If Glen wants to earn the desired 20% markup percentage for the job, then what will he need to charge the company?

**(Looking for more examples of markup? If so, then click here to access a retail markup example.)**

#### Step 1

First, Glen must calculate the total cost of the project which is equal to the cost of software plus the cost of the computers. Find the markup percentage calculation example below.

#### $2,000 + ($600*25) = $17,000

#### Step 2

Then, Glen must find his selling price by using his desired markup of 20% and the cost calculated for the project. The formula to find the sales price is as follows:

Sales Price = (Cost * Markup Percentage) + Cost

or

Sales Price = ($17,000 * 20%) + $17,000 = $20,400

In conclusion, Glen must charge the company $20,400 to earn the return desired on cost. This is the equivalent of a profit margin of 16.7%. For a list of markup percentages and their profit margin equivalents scroll down to the bottom of the Margin vs Markup page, or you can find them using the above markup formula. Using what you’ve learned the markup percentage calculation, the next step is to download the free Pricing for Profit Inspection Guide. Easily discover if your company has a pricing problem and fix it.

**Strategic CFO Lab Member Extra**

Access your Strategic Pricing Model Execution Plan in SCFO Lab. The step-by-step plan to set your prices to maximize profits.

Click here to access your Execution Plan. Not a Lab Member?

Click here to learn more about SCFO Labs

*(Originally published by Jim Wilkinson on July 24, 2013.)*

Your example of markup % for Glen at the computer company is wrong. He will not earn a 20% markup over cost.

The correct amount would be $21,250 – NOT $20,400.

The proper formula would be:

Computers (15,000) + Software (2,000) / (1 – .20 (Markup %) = $21,250.

Yes, the correct ans is $21,250.

the Calculation on Calculator is $2000+ $600*25 = $17000/.80 =$21250.

That’s correct, I just re calculated, I also get the $21250

Same

Same

I agree with Patel. However, in the example given in the exercise, I think it was only human error of mistaken percentage, which should have been 25% instead of 20%.

how did you get .80 ?

Drew isn’t actually correct.

The article is talking about how markup of costs to price.

Drew is talking about what percentage of sale price is then profit.

A 20% markup only gives 16.7% profit on the sale price.

Or to rephrase, the article is saying 20% markup is 20 cents on the dollar, whereas Drew would have you charge 32 cents on the dollar to have your profit be 20% of what you charge, rather than 20% of your costs.

If selling price is 40 000 and cost price is 32 000 what the mark up?

56.25%, profit divided by cost times 100.

25%

Please help

If my monthly expenses is $150,000 and my mark up is 300% what is the sales amount need to be to break even?

25%

25%

25% is right…

A kilograms of beans has a cost price of NU40 and a selling price of NU55. What is the percent markup?

The ans is 37.5 but how should we get it.

Mark Up calculation for Glen’s case is correct….

Lets make it simple using easier numbers.

If you have a product with $5 cost and you would like to put 50% mark up the sale price would be $7.5 ($5 the cost + half of that $5 which is $2.5)

So with the same formula given in this Case for Glen Story, it will give the same result:

(Cost * Markup Percentage) + Cost =Selling Price

($5 x 0.5) + $5 = $7.5

You can also try with 100% markup, if it easier to understand as it is obvious the sale price will be $10 (as you know 100% of $5 is $5) and again use the same formula it will give you the same result.

($5 x 1) + $5 = $10

BUT keep in mind, the profit Margin is only 50%, completely different to 100% which is the markup.

Incorrect. Your formula is for Margin and NOT markup.

what is the answer for;

find the cost of a pair of shoes sold for 1480.00 if the markup was 25% of the cost.

Following the exercise example, using same 25% markup, I think your selling price will be $1,850. See calculations below.

($1480*.25)+$1480

=$370+$1480

=$1850

You just marked up a price that was already marked up. The list price was $1480. Which is 25% More than the cost to the supplier. You just marked that $1480 up 25% more. Your $1850 is $666 more than the actual cost of the shoes. The COST is $1184, marked up 25%. 25% of $1184 is $296. $296+$1184=$1480. I did the COST+MARKUP=LIST (sale price). You did MARKED UP+ MARKUP= OVERPRICED. You just made the Markup now 77.78% from cost, with a GPM of 64%

Why doesn’t everyone multiply and divide by 1.25 instead?

1184

Margin % = ( Retail – Cost )/Retail,

Retail = Cost / ( 1- Margin%)

Cost = Retail * ( 1- Margin %)

No. Margin % is (Retail – Cost)/Cost, making Retail = Cost * (1+Margin %).

Under your model, if your markup was 100%, eg. you charged double the cost as your retail price, equation would make the retail price infinite.

DREw this is not calculating margin because it is marked up of a price not the margin

How do i calculate mark up % if i have the selling price and the cost of goods?

(selling price – cost price) /cost price

Can you guys explain further because i’m getting $20,400.00

Hi, this not relating to the problem above, I just need some help here.

How do i work my way around this? A company’s got a 23% mark-up for one of its customer, the boss wants a quote for a particular item sent to the customer not exceeding K5250.00.

I think your calculation is wrong. It’s mark up not margin. Mark up based on cost.

The example is correct because its about mark up over cost, not profit margin, these are 2 different formulas to get 2 different points of view about the same situation income-cost= profit.

Computers (15,000) + Software (2,000) / (1 – 16.7. (Markup %) = price from the profit margin desired

($17,000 * 20%) + $17,000 = price from the mark up percentage over cost

Drew is absolutely right. If you subtract 20% from 20,400, you get a net of %16,320. Glen would be losing profit! Not sure I can trust any of your other calculations – this is a gold standard.

To get the selling price you divide by .80 to get a 20% profit on the selling price.

How do u calculate the mark up if u are given the cost of sales and sales amounts

As well as how do u calculate the cost of sales if sales n mark up given

All of you are right.

Glenn is correct as he will get 20% mark up on cost but will get only 16.66 on sales.

Gross profit/Cost of sales= mark up %

Sales- Cost of Sales = Gross Profit

you are right

gross profit/cost of goods= markup %

and

gross profit/sales =gross profit %

You are all in fact wrong

$20,400 is 20% mark up

$21,250 is 20% margin

find the cost of a pair of shoes sold for 1480.00 if the markup was 25% of the cost.

help me to find the cost!! pls

$1,184 or $1,480/1.25

Paul, you are right…The 20,400 is technically called markup and the 21,250 is gross profit margin. The original author has correctly mentioned that a 20% markup gives only a 16.7% gross margin. Mathematically, markup percentages are larger than gross margin percentages. Also, if I am not mistaken, it is the gross profit margin that reflects on financial statements (correct me if I am wrong). Without going into the nitty-gritties of accounting terminologies, suppose the cost of a product is $100 and I want a 20% markup, on cost I would fix a price of $120. However, using the markup formula it would be cost/(1-desired margin on sales) (ref: Philip Kotler’s marketing management book), i.e. 100/1-0.2 which will give me a markup price of $125. Looking at this purely from a marketing perspective, whether I go to the customer with a quote of $120 or $125, the customer is going to negotiate and bargain. I prefer to go with a price quote of $125 which gives me a markup of 25% on cost or 20% on sales and even if the customer bargains and I give him a $5 discount, I end up with $120 that gives me a markup of 20% on cost though my gross profit margin may come down to 16.7%. You an imagine what would happen if I went with a quote of $120! None of the writers here have considered this marketing aspect. Also, we must remember that what the customer sees is the price quoted and not the cost to company.So, from a marketing perspective, it is always better to calculate the markup price using the formula given: cost/(1-desired return on sales)!!!!

Whenever I must calculate price given the mark up I use a formula that is easiest for me to remember which is

cost*(1+20%)=price excel calculates it best but if that isn’t possibly it’s the order I do the math which would be 1+20%= .20 (or just move the decimal over to the left 2 spaces) then multiple cost by .20

Though, I must say your formula may be a little easier to remember, and although your calcualtion is incorrect the formula still works……:

Sales Price = ($17,000 * 20%) + $17,000 = $20,400

17000*20%=$4,250

$4,250+$17000=21,250

It appears that your markup in this scenario is actually 19.99999%, didn’t know .00001% makes a difference on 17000.00

What is that markup ? How do we know about mark up percentage?

Can you calculate this please, find its cost price :

Medicine sale MRP-24.46

Quantity-50

Rate-5.50

CGST6% and CGST AMT- 16.5

SGST6% and SGST AMT- 16.5

TAX-12%

Medicine sold amt-rs. 275

Can you guys explain further because I’m getting $20,400.00. Isn’t $4250 25%?

This is all nonsense. In the real world, It’s a lot easier to calculate how much gross sales is needed to cover COGS and variables, then price my product at the market rate. If I can’t make sufficient cash flow based on the market price charged by competitors, and can’t lower my COGS and/or variables to make a profit, then the business model isn’t viable.

calculate the mark up on cost % and mark up on price % of the product that has price of $ 20 and marginal cost of $ 2

all of you r wrong i am the international accountant in Usa

Please help: what is the formula to calculate

Cost price and selling price when mark up percentage and profit is given.

Thank you

1- Sales = $ 918,000

Markup = 20%=0.20

Cost of sale= ?

Cost of sales formula = Sales / (1 + markup)

Cost of sales = 918000 / (1+0.20)

= 918000 / 1.20

= $ 765000

2- Markup= 20 %

Profit = $ 153,000

Selling price = ? Cost price = ?

First we calculate the cost price:

Just think if the profit is 153,000 that is the 20 % of cost price. The other 80 % is your cost of sales.

20 % of cost price is……………. $153000

100 % of Cost price ………………?

Now do cross multiplication:

=(153000 x 100 %) / (20%)

Cost price = $ 765000

for calculating selling price, we have formula;

Gross profit = selling price – Cost price

so selling price= Gross profit + cost price

=153000 + 765000

= $918000

selling price = cost price x (1+ markup)

= 765000 x 1.20 = 918000

really helpful… Jazak ALLAH

In your first example, the gross profit would be 153K, is that right? Then, from which I deduct the all variable cost I have to run my business to see whether based on the sales volume (918K) I make profit or losses, is that right?

I would very appreciate for your answer.

Thanks

If I know selling price and profit margin then how can I calculate cost of the product

Please HELP!

how to determine total cost of providing the service and the invoice cost (to customers) at cost plus 50%.

Data given for budgeted cost for service for next year:

Direct costs (600.000 including labour cost of 200.000)

Indirect costs: 300.000

Total Costs: 900.000

Actual direct cost for June were: 60.000

Thank you

the answer is correct

remember markup is addition to the cost to get sales value

the cost of the product is 100% plus the markup of 20%

so the sales price will be equal to (17000*20) +17000=3,400+17000

=20400.

any cost price given is 100% don’t forget

Most of you are right with your answer depending on how it is worded. What has been said is true based up what you’re being asked to calculate.

If the question is, “I want you to markup up the product to achieve a 20% margin,” then you take the cost and divided it by 1 minus 20% (1 – .20)

If the questions is just markup the product by 20%, then take the 20% times the cost, plus the cost.

In reality I’ve never heard of a retailer (38 years doing retail) that doesn’t look at margin, when they are talking about markup, meaning they want to “earn” 20% on the sales price after costs. The need to compute “margin” when marking up a product is especially relevant when you start mark it down. When you know a product has a markup of 20% (margin) you know you can only mark it down to 20% before you start to take a loss. So if you mark up a product to achieve a 20% margin, when you mark it down 20% you are at zero. If you were to mark down an item 20%, that you only “marked up” using the formula first given, you’d end up with a negative margin of $680 [(20,400 x .8 = 16,320 ; (16320-17000=-680)]

Hope this makes since, and that you’ll always “markup” you product to compute margin.

Actually, if you mark up a product by 20%, you can only mark it down 16% before taking a loss.

$100 + 20% = $120

$120 – 20% = $96

The correct answer is $21250,

mark-up =profit \cost

Mark Up calculation for Glen’s case is correct….

Lets make it simple using easier numbers.

If you have a product with $5 cost and you would like to put 50% mark up the sale price would be $7.5 ($5 the cost + half of that $5 which is $2.5)

So with the same formula given in this Case for Glen Story, it will give the same result:

(Cost * Markup Percentage) + Cost =Selling Price

($5 x 0.5) + $5 = $7.5

You can also try with 100% markup, if it easier to understand as it is obvious the sale price will be $10 (as you know 100% of $5 is $5) and again use the same formula it will give you the same result.

($5 x 1) + $5 = $10

BUT keep in mind, the profit Margin is only 50%, completely different to 100% which is the markup.

I got this site from my pal who told me on the topic of this website and at the moment this time I am visiting this website and reading very informative articles here.

In simple terms, if you “markup” 15% over $100

The correct answer is:

$100X1.1765=$117.65

Let’s do reverse calculation:

$117.65X.15%=17.65

or

$117.65-17.65=$100

In short, Markup or over a given number, the actual percentage is more (it’s not 15% but it’s 17.65%) in reality.

–

This is by far the most confusing thread I have read today…lol!

Every person has said: “Let’s keep it simple”…followed by confusing and non-simple calculations… 🙂

The reason it’s confusing is because people are using the terms markup and margin incorrectly.

Makeup percentage is the increased percent of the cost and a simple calculation of cost x markup percent to equal price. …which is what this article was originally focussing on.

Margin (or margin percentage) is the profit as a percentage of the sale which what most business are concerned with. Its profit (price minus cost) divided by the price.

I am a remodeling contractor and here is what I use as a formula for arriving at a dollar amount .can you tell me if I am right in my calculations.

If I do a job at cost + 20% ,I calculate each item this way ,then total all items together at the end for overall job cost.

So to get my amounts I do this

$10.00 board + tax=$10.98×2 =$21.96×.20=$4.39 +$21.96=$26.35 ,total cost of board to customer.

Thank you Joe

If a stock goes from $50 to $100 you doubled your money if you bought at $50, and is a $50 gross profit on the trade if you sold at $100 = 100% markup

Consequently, if you shorted the same stock for $100 (Sell first then buy it back later) and it slides down to $50 and you buy it at $50, you have a 50% gain on your trade.

In first example cost is buying at 50 and sale is selling at 100. and profit is 100%. Cost is the absolute value know and used as the comparison to sale price of $100. In second example Sale Price is the absolute value and used on comparison to cost price of $50. Moral of story is your percent derived from cost will be higher than percent derived from sales price. When calculating percents from two different numbers working from either cost to sales or sales to cost.

I agree with you Albert. That is why short selling stocks is a bad thing.

Hahaha! Thanks guys for the most confusing conversations and examples. But it’s a great exercise!

I think it would be much easier if everyone just focuses on ONE example before throwing in another new one.

Focusing on original Glen’s example, the author IS right!!

Let’s make it simple:

Cost 17,000, to achieve 20% markup, selling price should be 20,400(17,000+20%), which is also 16.67% of profit margin(3,400/20,400);

However, in order to achieve a 20% of profit margin, then cost of 17k is only 80% of the total selling price, which should be 21,250(17,000/0.8).

Let’s reverse: 21,250-20%=17,000.

That was why the above:

“Peggy January 14, 2015 at 2:57 pm #

Drew is absolutely right. If you subtract 20% from 20,400, you get a net of %16,320. Glen would be losing profit! Not sure I can trust any of your other calculations – this is a gold standard”

Peggy, when you Add 20%,on 17,000, that’s markup on cost, but when you subtract 20% from 20400, that’s margin of 20% on selling price.

Therefore, only Paul is right!

Paul March 8, 2015 at 7:34 pm #

You are all in fact wrong

$20,400 is 20% mark up

$21,250 is 20% margin

Key issue here is to unify the terms: markup or margin. My understanding is that “Markup” is the profit on cost, whereas “Margin” is the profit on selling price. Am I correct?

Thanks for reading……

Regards

JaiJai

👏🏻👏🏻👏🏻👏🏻👏🏻

By far the best explaination I’ve read so far and most clear…..and I read almost every comment.

Well said and thank you!

JaiJai and Yomomma are right!

Does anyone know how to calculate the SELLING PRICE based on 100% markup. if given cost amount ($358) and Total Sales (how much i paid to my supplier)=$22076 and Freight= $509.33. I calculated the cost price including the freight and all is about $184.10 (is this value considered as CIF price?.

Yeah, it was indeed a real confusing thread I have ever read…lol.

JaiJai’s analyse and calculation is absolutely correct. As agreed with JaiJai, only Paul got it right as he understood the difference between “MARKUP” and “MARGIN” in what this article trying to relates.

Yomomma has also provide the correct formula for the “MARGIN” calculation too, just need to multiply 100 after divided by the (sales) price.

Kudos to you guys!

In my opinion the easiest way to do it is like this:

In excel: =((Cost*20)/80)+Cost or =((17,000*20)/80)+17,000: 21,250

here is an easy formula:

(sell price – cost price)/cost price x 100 = MARKUP %

(sell price – cost price)/sell price x 100 = MARGIN %

When we say our SP has a profit margin of x%:

The profit can be calculated as

P = x% of SP

=> SP – CP = x% of SP (P can be substituted by (SP – CP) )

=> SP – (x% of SP) = CP

=> SP(1 – x%) = CP

=> SP = CP/ (1-x/100)

Now apply this to the above question and see.

this is wrong…mark up =profit/selling price and margin=profit/cost price

This makes understanding mark up and margin easier. Mark up is on cost meaning cost is 100%. Margin is on sells meaning sells is 100%.

Hence SP-CP=P

120%-100%=20%

The rest is mathematical work. Hope this made it easier for you..

Hey Guys! I just want to ask what is the best way to compute the total value for freight based on 4% (target freight percentage )

EXAMPLE :

TOTAL BUYING PRICE @ 13% : $282,000

TOTAL SELLING AMOUNT : $ 332,000

SIZE OF CONTAINER : 1X40 MAXIMUM ESTIMATED FREIGHT BILLING : $5,300

DECLARED /TARGET PERCENTAGE FOR FREIGHT CHARGES IS : 4%

1) What is the best formula to compute if the content of the container is okey meaning no loss?

2) How to calculate the total amount for freight charges considering that target percentage for freight is 4%?

Thank you !

may i seek your help on this problem:

If the mark up rate on selling price is 100% what is the cost rate?

thanks for the assistance

the mark up price of camera is 3/2 of the cost price and selling price is 9/10 of mark up price. find the percentage profit or loss ?

Help me on this one guys.. The following pricing is used by a retailer. Calculate the % mark-up for the product sold. Show all calculations. Retail price is R499.95 and cost price is R139.95

Wow – Can’t believe how much discussion this sparked since my first comment! It looks like everybody but Peggy and I still have it wrong… Just ran into this with another Sales Rep who ALSO is incorrectly calculating markup @ work.

If you want to achieve a 20% MU on a $10 item, you would SELL the item for $12.50. You would NOT sell it for $12.

Correct Formula: 10 / (1-.20) = $12.50

Incorrect Formula: (10 x .20) + 10 = $12.00

Don’t believe me? Find a simple calculator and type in ’10’ ‘X’ ’20’ ‘MU’. You’ll get $12.50.

It’s astonishing how many people don’t understand simple business math.

you are using 25% bro…. press 10 x 1.25= 12,50 that is 25%… press 10 x 1.20=12.00

press 10 + 25% = 12,50 and press 10 x 20%= 12.00……….. is the calculator lying?

It is a right calculation based on the following equations:

1) Markup=(selling price/total cost)-1

So, Markup=(20,400/17000)-1

= 0.2 or 20%

2) Markup=(selling price-total cost)/total cost

=(20,400-17000)/17000

=0.2 or 20%

describe how to find the selling price of an item that has been marked up by 110%

This the formula that I know your cost is $100 and your retail markup is 35% this is what you do 100÷ .65 =$153.84 the markup will give you, your $35 profit and extra for your expenses,

this is confusing i don’t understand one thing what are you saying can you please break it down i’m only in seventh grade for pete’s sake everyone’s just throwing in their own i don’t get anything

1480 is the selling with a markup of 25%

That means the selling price = 125% of the cost.

1480 = 125%

x = 100%

x 100

_____ = ______

1480 125

x = 1480 X 100

__________

125

= 1184 THe original cost before markup was $ 1184

———–>

Test:

1184 * 1.25 = 1480 which means calculation is correct

Have a good day.

The spacing is modified with upload which makes the maths unreadable. Sorry!

what is the mark up percentage of productsa sold within a milk baR PLEASE?

sorry forgot to add in Australia… what is the percentage markup for products sold within a milkbar?

hi can you help on how to answer the igcse edexcel accounting 2016 june question 12 (mark up part)

Hi Guys… am a sales rep with 10 experience. Drew is wrong, very wrong and you can get fired for that, lol.. just joking, well Drew’s method is using 25% and not 20%, its a skill used by greedy sales rep working on commission… well i hope this my example will help you out…. easy!!!

For my calculation examples I am going to use a psychological selling price of $20400

My cost price $17000

Mark-up Percent

As we know our cost and selling price, we want to know the mark-up percentage we get.

Mark-up Percent=(Selling Price-Cost Price) ÷ Cost Price

Mark-up Percent = ($20400 – $17000) ÷ $17000

Mark-up Percent = $3400 ÷ $17000

Mark-up Percent = 20%

Selling Price

Should we not have the desired selling price but we know we sell all our products for a 20% Mark-up:

Selling Price = Total Cost x (1 + Mark-Up Percent)

Selling Price = $17000 x (1 + 0.20)

Selling Price = $17000 x (1.20)

Rounded Selling Price = $20400

Gross Margin Percent

Changing the Mark-up Percentage calculation slightly to the Gross Margin Percent calculation:

Gross Margin Percent = (Selling Price – Cost Price) ÷ Selling Price

Gross Margin Percent = ($20400 – $17000) ÷ $20400

Gross Margin Percent = $3400 ÷ $20400

Gross Margin Percent = 16%

Mark up and Gross Margin, not the same thing!

Thanks.

I’m preparing to have a meeting with our sales staff to discuss this exact topic and stumbled upon this rather old article with rather recent comments. Normally I wouldn’t resuscitate such an old thread; but, while the math is sound the last comment may give the inexperienced the wrong idea about using margins in price setting.

Let me put my tongue in cheek and describe it this way. I’m the owner of a company, I have taken on risk and have a lot invested in my company so my goal is to make a 20% profit margin at the end of the year. We need the 20% to pay for; increases in raw material costs, higher wages for our employees, a critical expansion in order to keep our company competitive and hopefully a return for me the investor.

I have two salesmen, let’s call them Drew and Tristan. They both have to move $17,000 worth (cost) of product for the year and have some latitude in pricing.

Drew uses the formula: cost / (1 – .20) = sales price.

Drew is new to sales but manages to hit his sales goal for the year. He is hungry and his sales are based on the merits of the company and he is able to differentiate our product in a meaningful way from our competitors.

Tristan uses the formula: cost * (1 + .20) = sales price.

Tristan is a seasoned veteran and also hits his sales goal for the year. Tristan has been at the game for a long time, he is tired and he bases most of his sales on price point.

Here is how the company did:

$41,650 in revenue, $7,650 in profit (41,650 – 34,000 = 7,650) for a profit margin of 18.37% (7,650/41,650).

Not bad but we did not hit our profit margin goal…time to look at the financials. Expenses are all within budget. Let’s take a closer look at sales.

Drew’s sales $21,250, $4,250 in profit for a profit margin of 20%. Nailed it.

Tristan’s sales $20,400, $3,400 in profit for a profit margin of 16.67%. Fell short.

I know who I’ll fire if I have to make staffing decisions 🙂

Drew’s method has nothing to do with greed. It is simply using the end goal to set pricing in a very easy to use formula.

This thread perfectly demonstrates the pitfalls in thinking when it comes to margins, markup and price setting. Thank you all past and present for this discussion it has given me a great direction in which to take my meeting.

Hi.

Selling price = cost + mark up

Selling price = cost + margin

These are the basic computation to compute the selling price.

Assuming based on the data

“Glen has decided that he would like to earn a markup percentage of 20% over the cost of the computers to ensure that he makes the proper amount of profit.”

The statement is very clear that the basis of mark up is BASED ON COST not BASED ON SELLING PRICE. =

The cost of $17,000 + mark up of 20% of COST that is $3,400 = $20,400 selling price.

but if the statement shows the margin is 20% it means that is BASED ON THE SELLING PRICE not BASED ON COST so the answer will be different.

The cost of $17,000 which is 80% of the selling price + $4,250 which is 20% of the selling price = $21,250 that is 100%.

Just take 17,000 and divided by 0.80 you get 21,250

0.80 20%

0.70 30%

0.60 40%

Hi, I need to determine how to keep a retailer margin % whole while running a promotion – funding needed to keep retailer margin % whole given sale price.

Example:

Product cost to retailer :$10

Product margin: 30%

Normal selling price $14.29

Please provide the calculation to determine how much we would need to fund to keep the retailer margin % whole given the promo sale price and fund the markdown.

Thanks !!

The following data are available: • Annual fixed costs: $12,000,000 • Variable costs per unit: $11.50 • Expected annual output level: 500,000 • Competitors’ prices varied from $60 to $100 (although most were at least 12 months old). If the company uses full-cost pricing using a mark-up of 50% on total unit costs, calculate the price to be charged for ‘Storm Trooper’. (a) What adjustments would you seek to make should the pricing appear to be ineffective?

Glen is correct the 20% Mark up is on cost

you can also use this formular $17000(1+20%)

$17000(1.2)

$17000*1.2= $20400

I bought a pair of book for #22.00 and make profit of 22%.. What is the selling price?

Thank you to yourself and the few others who clarified this. So many ppl don’t know the difference between markup and margin and they’re only confusing those who read this article trying to learn. The Glen example is correct. Those who said it is not are calculating MARGIN which IS NOT what the example was calculating. And the article’s author clearly stated what the margin would be in relation to markup.

Tina you hit the nail on the head. These people are just so quick to try to find mistakes in what was originally said but yet they do not know the difference between a profit MARGIN percentage and a MARKUP percentage.

Markup percentage is nothing more than the ratio between the selling price and the cost of the item. When the profit margin is the ratio between PROFIT and TOTAL REVENUE. The two are very rarely the same.

This guy was merely trying to show that the Markup percentage does not equal the Profit Margin.

what is the formula to calculate wholesale selling price when retail price is known, and retail initial marku are know?

Thank you,

Gregg Solomon

New York

if you have chocolate bars at a price of $24 per dozen and sell them for $3 each what would be the markup percent?

5. Gross profit is 25% of cost price. If selling the price of an article is $ 285.00, what is (a) cost price (b) gross profit? ( Ans first I times 285*25 them ÷ by 100 equal A answer is 71.25 then B I plus 71.25+ 285 = 356.25) think he said this was wrong too

I need an answer ,

My sales price: 41400

Commission: 10%

I need the markup value: ?

Plz provide simple calculation steps

what is the markup percent for software business?

A construction supply recognizes a mark up of 345 if it sells paint at a mark up of 30% of the selling price.

a. Find the regular price of the paint, cost and rate of the mark up based on cost.?

b. Suppose the overhead expenses are 15% of the cost, how much should the price be to break even?

c. If the paint is sold for 700, how much is the profit or loss?

Need Help Please

Hi,

I am trying to write out the formula to work out the cost price, if selling price of $750 and markup of 120% is known. Cost price and profit margin needs to be calculated

Thanks

With thanks! Valuable information!

what is the markup percent of a jersey that has a retail price of $145 and a cost price of $71

i need some help with this question

a men jacket cost $30 each and the owner wants a 35% gross margin what retail selling price should the store charge

The store should use a gross profit multiplier to achieve the desired gross profit. The gross profit multiplier to arrive at a 35% gross margin would be item cost x 1.55-The jacket cost $30. The retail selling price of the jacket should be $46.50 to obtain a desired gross margin of 35%.($30 x 1.55=$46.50).I did not say MARKUP.

I said MARGIN. The multiplier margin for 35% is 1.55-Find a good multiplier chart.You can find them easily online.They come in very handy.MARKUP will always be higher than MARGIN. A retailer should always focus on his margin or gross profit. Markups can really distort the picture.A markup can easily be 200%,300%, or

even 500%. Nobody makes a profit like that. Accountants and Good Merchants go by Gross Profit or Gross Margin.

Stop using the WRONG formulas, you guys are a bunch on online trolls.

The example is correct and if you look at price mark up calculations and other sources, the example in this article is correct. Where is the 1- .80 coming from? It’s making this process more complex than has to be.

Formula to find your markup % is

[(Price- cost)/ COST ]*100

In the same regard when you have a percentage to find your Price

It’s [Cost* % markup]+cost

This article is correct. Please keep your response based on the examples and problems given. You’re complimenting this more than you have to, stop trolling.

As a merchant, I always prefer to look at my margin.

Mathematicians will probably debate all of this. However,

they are not the ones buying and selling merchandise.

I prefer to know how much gross profit I am really realizing

on a sale. I don’t want to distort financial statements or not

understand the difference. I live in the real world. I don’t

want to dream on about making 500% on a sale. That’s for

nonfinancial people.At the end of the day, show me the money.

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