Mark up & margins (help!)

RyanW

Can someone please help me on this topic. I just don't understand mark ups and margins??? Where do i start! Help is appreciated... thanks in advanced. If you could explain their principle and how to do them.

Andy Blyth

Hi,

Don't worry, it's easy.

If a business buys a product for £75 and sells it for £100, they make £25 profit, right?

The mark-up is the profit as a percentage of the purchase price, so in this case the mark-up is 33% (25/75).

The margin is the profit as a percentage of the sales price, so in this case the margin is 25% (25/100).

Make sense?

sdv

[thread=26931]try this link[/thread]

PGM

Andy Blyth wrote: »

Hi,

Don't worry, it's easy.

If a business buys a product for £75 and sells it for £100, they make £25 profit, right?

The mark-up is the profit as a percentage of the purchase price, so in this case the mark-up is 33% (25/75).

The margin is the profit as a percentage of the sales price, so in this case the margin is 25% (25/100).

Make sense?

Thats a good simple explaination. I've tried to explain it to senior mgt hear, once with no success. Definitely a tricky concept to get your head round.

RyanW

Thanks everyone! Putting it simple makes the books easier to understand... REALLY APPRECIATED!