Margin and Markup

This short E-Learning module will explain with examples the difference between markup and margin

Objectives

Understand the difference between markup and margin

Apply your knowledge to calculate the markup and margin for a small range of products

Part 1: Understanding the difference... Margin

Margin is a sale minus the cost of the goods sold. For example, a product sells for £100 and costs £70, the margin is £30 or the margin percentage is 30%

This is calculated by the margin divided by the sales multiplied by 100. So a product sells for £150 and costs £125; £25 divided by £150 multiplied by 100 = 16% Margin

Part 2: Understanding the difference... Markup

Markup is the amount by which the cost of a product is increased to get the selling price. So a markup of £30 to the £70 cost price reaches the £100 selling price. Or markup percentage is 42.9%

This is calculated by the markup divided by the cost multiplied by 100 to get the percentage. So using the previous example, a product sells for £150 and costs £125: £25 markup divided by £125 cost multiplied by 100 = 20% markup

Part 3: Your turn!

A shower sells for £78 the cost is £49. What is the margin percentage?

  • 37.2%
  • 35.3%
  • 41.1%

A shower sells for £78 the cost is £49. What is the markup percentage?

  • 56.3%
  • 59.2%
  • 53.8%