How it's calculated
Price = Cost × (1 + Markup)
Margin = Markup ÷ (1 + Markup)
Markup is expressed as a decimal here: 25% is 0.25. The margin is always lower than the markup.
Assumptions
- Prices exclude sales tax, VAT or GST.
- Cost is the full cost of one unit.
Worked example
A cost of 80 with a 25% markup gives a price of 100, a profit of 20 and a 20% margin.
Questions
Why is my margin lower than my markup?
Markup divides profit by cost; margin divides it by the higher selling price, so it is always smaller.
What markup gives a 50% margin?
A 100% markup: cost 50, price 100, profit 50.
Can I enter a markup over 100%?
Yes, up to 1,000%.