The business clarity series · Video 17
Markup and Margin Are Different—Here's Why It Matters
Markup and margin sound similar, but they answer different questions. Here's a quick fictional example.
0:35 · English narration · Captions included in the video
Full transcript
Markup and margin sound similar, but they answer different questions. Here's a quick fictional example.
A product costs eighty dollars and sells for one hundred dollars. The gross profit is twenty dollars.
Markup compares gross profit with cost. Twenty divided by eighty is twenty five percent.
Gross margin compares gross profit with selling price. Twenty divided by one hundred is twenty percent, before overhead and other expenses.
Try the free profit margin calculator at YourAI Ledger dot com, and make sure you're using the percentage you mean.
Illustrated educational overview. Examples and amounts are fictional where shown. Confirm accounting and tax decisions with a qualified professional.