Mark up and Margin

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troy
troy Registered Posts: 275 Dedicated contributor 🦉
in AAT Level 4 (Level 8 in Scotland)
Would someone please explain how to work out Mark up and Margin please?
I know i should have learnt this at Intermediate level but i just couldn't get my head around it :huh:

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  • jh999
    jh999 Registered Posts: 17 New contributor 🐸
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    Mark up is an increase above cost price. ie If it costs £1, a 50% markup will lead to a selling price of £1.50.

    Margin is a proportion of selling price. ie If it sells for £1, a 50% margin means it cost 50p to make.

    I believe that's correct, but it may be a little simplistic.
  • jay cutler
    jay cutler Registered Posts: 57 Regular contributor ⭐
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    I believe as formulas:

    Gross Profit Margin = Gross Profit/Sales x 100%

    Gross Profit Mark up = Gross Profit/Cost of Sales x 100%

    where Gross Profit = Sales - Cost of Sales

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