# Mark up &amp; margins (help!)

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.

• 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?
• Registered Posts: 585
• 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.
• Registered Posts: 19 Dedicated contributor ? ? ?
Thanks everyone! Putting it simple makes the books easier to understand... REALLY APPRECIATED!