# Mark ups and Margins ... HELP!!!

Registered Posts: 155 ? ? ?
Hi All,

• Registered Posts: 302
Ok - with your mark up - your cost of goods is always 100% and with the margin, the sales figure is always 100%.

So, lets take 3 figures

Mark up
cost of sales 100% £1680
Profit + 25% £420
Sales = 125% £2100

These same figures but in a different manner:

Margin
cost of sales 80% £1680
Profit 20% £420
Sales = 100% £2100

all you need to remember is to multiply for a mark up and divide for margin

Hope this helps
• MAAT Posts: 296
MarkT wrote: »
Ok - with your mark up - your cost of goods is always 100% and with the margin, the sales figure is always 100%.

The only thing I would add is...

Mark Up (i.e. you mark up your sales higher than 100%)

Sales 125%
Cost of Sales 100%
Gross Profit 25%

Margin (Margin inside 100%)

Sales 100%
Cost of Sales 75%
Gross Profit 25%

Thats how I remember it.
• Registered Posts: 80 ? ? ?
Louise89 wrote: »
The only thing I would add is...

Mark Up (i.e. you mark up your sales higher than 100%)

Sales 125%
Cost of Sales 100%
Gross Profit 25%

Margin (Margin inside 100%)

Sales 100%
Cost of Sales 75%
Gross Profit 25%

Thats how I remember it.

This is how I remember it to :001_smile:
• MAAT Posts: 296
Haysah wrote: »
This is how I remember it to :001_smile:

• Registered Posts: 8 Regular contributor ⭐ ? ⭐
Hi
The Learning zone on the AAT website has a fantastic section on markup and margin. I really had to think about it in class but when i went through the learning zone section once it clicked straightaway.
I'd definitely recommend it!
• Registered Posts: 57 ? ? ?
Louise89 wrote: »
The only thing I would add is...

Mark Up (i.e. you mark up your sales higher than 100%)

Sales 125%
Cost of Sales 100%
Gross Profit 25%

Margin (Margin inside 100%)

Sales 100%
Cost of Sales 75%
Gross Profit 25%

Thats how I remember it.

That's how I remember it too!
• Registered Posts: 1,954
Louise89 wrote: »
The only thing I would add is...

Mark Up (i.e. you mark up your sales higher than 100%)

Sales 125%
Cost of Sales 100%
Gross Profit 25%

Margin (Margin inside 100%)

Sales 100%
Cost of Sales 75%
Gross Profit 25%

Thats how I remember it.

Although in your mark up example, gross profit ends up being 20% (25/125)
• MAAT Posts: 296
PGM wrote: »
Although in your mark up example, gross profit ends up being 20% (25/125)

You've confudled me now PGM!!

Without looking at my notes I'm pretty sure its 125% - 100% - 25% as the profit is sales less cost of sales...
125-100=25 ?
• Registered Posts: 1,954
Louise89 wrote: »
You've confudled me now PGM!!

Without looking at my notes I'm pretty sure its 125% - 100% - 25% as the profit is sales less cost of sales...
125-100=25 ?

So you've bought your hat for £100, added 25% mark up, selling price £125.

Then when you work out your gross margin % (gross profit / revenue)

£25 / £125 = 20% gross profit.

You make more profit using the same % of margin compared to mark up.
• MAAT Posts: 296
Oh I see what you're saying... I've explained it wrongly,

Mark Up

Sales 125%
Cost of Sales 100%
Gross Profit 25% <<< I meant this to be Mark Up % , then the Gross profit would be as you quite rightly said 20%

So;

Mark Up (i.e. you mark up your sales higher than 100%)

Sales 125%
Cost of Sales 100%
Mark up 25%
Profit 20%

So thats correct now?
• Registered Posts: 1,954
Louise89 wrote: »
So thats correct now?

Yeah, I knew what you meant before though

Its a horrible subject. And you never get away from it, when someone tells me to charge 30%, I hate to ask the question mark up or margin..?
• MAAT Posts: 296
PGM wrote: »
Yeah, I knew what you meant before though

Its a horrible subject. And you never get away from it, when someone tells me to charge 30%, I hate to ask the question mark up or margin..?

OH! PGM! Why did you let me make a fool of myself!

I agree... I hope they don't come up too much.
• Registered Posts: 1,954
Louise89 wrote: »
OH! PGM! Why did you let me make a fool of myself!

I'm sorry Louise but the best way to learn mark up and margin is public humiliation!

Accountancy courses are too soft these days
• Registered Posts: 302
PGM wrote: »
I'm sorry Louise but the best way to learn mark up and margin is public humiliation!

Accountancy courses are too soft these days

I've been watching this cat and mouse game for a few days now...

I'm afraid to ask if my post at the top is right now, but I guess it wouldn't hurt if you could let me know
• MAAT Posts: 296
MarkT wrote: »
I've been watching this cat and mouse game for a few days now...

I'm afraid to ask if my post at the top is right now, but I guess it wouldn't hurt if you could let me know

What can I say Mark, I've been schooled/accounted! Best ask PGM, he is top dog.
• MAAT Posts: 296
PGM wrote: »
I'm sorry Louise but the best way to learn mark up and margin is public humiliation!

Don't worry, I'll never get it wrong again!
• Registered Posts: 1,954
MarkT wrote: »
Ok - with your mark up - your cost of goods is always 100% and with the margin, the sales figure is always 100%.

So, lets take 3 figures

Mark up
cost of sales 100% £1680
Profit + 25% £420
Sales = 125% £2100

These same figures but in a different manner:

Margin
cost of sales 80% £1680
Profit 20% £420
Sales = 100% £2100

all you need to remember is to multiply for a mark up and divide for margin

Hope this helps

I get the same amounts.
Louise89 wrote: »
What can I say Mark, I've been schooled/accounted! Best ask PGM, he is top dog.

Yes, I specialised in mark up and margin
• Registered Posts: 302
PGM wrote: »
I get the same amounts.

Yes, I specialised in mark up and margin

I feel much happier now