Home » Categories » 02. Shop Management 5.9 Legacy

Calculating Markup % / Margin &

Percentages 

Margin The percentage margin is the percentage of the final selling price that is profit.


Markup
A markup is what percentage of the cost price do you add on to get the selling price.

These are different, a selling price with a margin of 25% results in more profit than a selling price with a markup of 25%.

With margins, a 50% margin means that half the selling price is profit. In markups, that is a 100% markup (you have added 100% of the cost price to make the selling price). With margins, a 100% margin is only possible if the cost price is zero.

To understand why margins are higher, imagine an item that costs fifty dollars. If you sell it with a margin of 50% - that means fifty percent of the selling price should be profit. Thus, if you sell it at 100 dollars, half of the selling price is profit; a margin of 50%.

If you sell the same item (cost fifty dollars) with a markup of fifty percent, you add fifty percent of the cost price. Fifty percent of the cost price is twenty-five dollars. This makes the total selling price seventy-five dollars; a 50% markup.

How to Calculate Margins

You will often have to calculate margins. Either to work out a selling price from a cost price, or to work out what margin a certain selling price would result in.

Selling Price from Cost

The full formula for working out a selling price from a cost price and a certain margin is :

selling = cost/((100-margin)/100)

Thankfully there is a quicker way to work it out.

For a five percent margin, divide the cost price by 0.95.

For a ten percent margin, divide the cost price by 0.9.

For a fifteen percent margin, divide the cost price by 0.85.

For a twenty percent margin, divide the cost price by 0.8.

For a twenty-five percent margin, divide the cost price by 0.75.

For a thirty percent margin, divide the cost price by 0.7.

Hopefully you can see the pattern.

Margin from Selling price and Cost

Sometimes you will have a cost and selling price, and need to know what margin that results in. The formula is :

margin = (1 - (cost/selling))x100

If cost/selling is 0.95, the margin is five percent.

If cost/selling is 0.9, the margin is ten percent.

If cost/selling is 0.85, the margin is fifteen percent.

If cost/selling is 0.8, the margin is twenty percent.

0 (0)
Article Rating (No Votes)
Rate this article
  • Icon PDFExport to PDF
  • Icon MS-WordExport to MS Word
Attachments Attachments
There are no attachments for this article.
Comments Comments
Related Articles RSS Feed
5.9.x Reports Pack
Viewed 2117 times since Fri, May 10, 2013
Launching any web integrated button within manager loads a blank page
Viewed 2390 times since Wed, Aug 8, 2012
Setup An IAP Vendor For Use With Activant or eStore Button
Viewed 6982 times since Wed, Jun 4, 2008
Install Customers Marked Non-Tax Report
Viewed 2316 times since Tue, Dec 30, 2008
Shop Mgmt Training + Setup Workbooks
Viewed 2915 times since Wed, May 23, 2012
Create All Customers Mailing Labels
Viewed 7831 times since Sat, Nov 22, 2008
How to Write Off Bad Debt
Viewed 13151 times since Fri, Aug 3, 2012
Reward Your Customer Referrals
Viewed 3604 times since Fri, May 8, 2009
Restoring Mgmt Training Videos
Viewed 2494 times since Wed, Oct 15, 2008