Markup is the difference between cost and selling price. Basing prices on a percentage markup over cost is a common revenue model in industries such as manufacturing and retail.
ExampleA manufacturer produces a coffee decanter for $2 and charges $3.Markup = 3 - 2 = $1
Calculation NotesMarkup is generally based on selling price and cost of goods sold. It is often expressed as a percentage using the formula:Markup = ((price / cost) − 1) × 100In the example above with a price of $3 and cost of $2 the percentage markup is calculated:Markup = ((3 / 2) − 1) × 100 = 50%
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