Margin Markup is an important concept in business that involves setting the right price for goods and services. It refers to the percentage amount that a business adds onto their cost price to create a selling price. By using this approach, businesses are able to cover their overhead costs while also generating a profit. The formula to calculate margin markup is: [(Selling Price – Cost Price) / Cost Price] x 100.
For example, if a business purchases an item for $10 and sets a selling price of $20, their margin markup will be 100%. This means the business is doubling its money – gaining $10 for every $10 invested. Understanding how to set prices correctly with Margin Markup can help businesses increase their profits and stay competitive.