Markup percentage is a business concept that measures the difference between a product’s cost and its selling price. Put simply, it’s the ratio of a product’s selling price compared to its cost. To calculate markup percentage, you need to divide the amount of markup (in dollars) by the item’s cost (also in dollars). The result is then expressed as a percentage. For example, if an item costs $10 and has a selling price of $15, markup percentage would be calculated by taking the markup ($5) divided by the cost ($10), which results in 0.50 or 50%. By understanding how to properly calculate markup percentage, businesses can make smarter decisions about their pricing and maximize their profits accordingly.
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