Mark up & margins (help!)

RyanW
RyanW Registered Posts: 19 Dedicated contributor ? ? ?
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.

Comments

  • Andy Blyth
    Andy Blyth Registered Posts: 48 ? ? ?
    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
    sdv Registered Posts: 585
    [thread=26931]try this link[/thread]
  • PGM
    PGM Registered Posts: 1,954
    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
    RyanW Registered Posts: 19 Dedicated contributor ? ? ?
    Thanks everyone! Putting it simple makes the books easier to understand... REALLY APPRECIATED!
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