PRESENTATION OUTLINE
Markup Vs Gross Profit Margin
Markup = % added to the cost price to establish a sell price
Gross Profit Margin = % of the sell price that is profit
Markup:
Starts with the cost price
Markup:
Multiplies the cost price by the markup % to calculate the $ profit.
Markup: Adds the calculated $ profit to the cost price to establish the sell price
Example: Cost price $10 x markup % 50% = $5 profit
Example: Add the $5 profit to the $10 cost price to establish a $15 sell price
Gross Profit Margin asks: What % of the sell price is profit?
Answer: $5 profit / $15 sell price x 100 = 33% = Gross Profit Margin
Gross Profit Margin in Sell Price
Markup % is used to establish selling prices
Margin % is used to calculate the profit $ contained in sales or selling prices.
