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The Difference Betweeen Markup and Gross Profit


 

 

 

The Difference Between

“MARKUP” & “GROSS PROFIT”

 

 

 

Did you know that a markup of 35% only gives you a gross profit of 26%?

How many times a day do you or your counterpersons mark something up from cost X% thinking that’s what you will make?

The problem is that simple markups are easy to do in your head, but gross margin calculations are more difficult.

 

                         A.       SIMPLE MARKUP                                          SELLING PRICE=

                                    OF X%                                                            COST PRICE + (X% x COST PRICE)

 

                         B.       MARKUP TO GET A                                       SELLING PRICE=

                                    SPECIFIC GROSS                                         COST PRICE / (1 - X%)

                                    MARGIN (X%)

 

The table on the next page shows what percentage you must markup to achieve the gross margin you want.  If you use this table, you can do the easy calculations (A. above) and make the right grosses!

 

PROFIT MARGIN TABLE

 

 

TO GROSS          MARKUP                           TO GROSS          MARKUP

 

20.00%                 25.00%                               50.00%                 100.00%

21.00%                 26.58%                               51.00%                 104.08%

22.00%                 28.21%                               52.00%                 108.33%

23.00%                 29.87%                               53.00%                 112.77%

24.00%                 31.58%                               54.00%                 117.39%

25.00%                 33.33%                               55.00%                 122.22%

26.00%                 35.14%                               56.00%                 127.27%

27.00%                 36.99%                               57.00%                 132.56%

28.00%                 38.89%                               58.00%                 138.10%

29.00%                 40.85%                               59.00%                 143.90%

30.00%                 42.86%                               60.00%                 150.00 %

31.00%                 44.93%                               61.00%                 156.41%

32.00%                 47.06%                               62.00%                 163.16%

33.00%                 49.25%                               63.00%                 170.27%

34.00%                 51.52%                               64.00%                 177.78%

35.00%                 53.85%                               65.00%                 185.71%

36.00%                 56.25%                               66.00%                 194.12%

37.00%                 58.73%                               67.00%                 203.03%

38.00%                 61.29%                               68.00%                 212.50%

39.00%                 63.93%                               69.00%                 222.58%

40.00%                 66.67%                               70.00%                 233.33%

41.00%                 69.49%                               71.00%                 244.83%

42.00%                 72.41%                               72.00%                 257.14%

43.00%                 75.44%                               73.00%                 270.37%

44.00%                 73.57%                               74.00%                 284.62%

45.00%                 81.82%                               75.00%                 300.00%

46.00%                 85.19%                                                                          

47.00%                 88.68%                                                                          

48.00%                 92.31%                                                                          

49.00%                 96.08%                                                                          



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