How to calculate markup and margin

These examples show how to quickly and easily calculate markup from profit margin and profit margin from markup.

Calculating the Gross Profit Margin

Cost of goods sold divided by Sales returns the gross profit margin. 

Step by step calculations for cost of goods and gross profit are illustrated in the Figurewizard sample forecast for cost of goods sold and gross profit. The gross profit margin is set at 41%.

How to Calculate Markup from Profit Margin

Taking the Figurewizard forecast's year one gross profit margin of 41% as an example, the markup on cost that represents is calculated as follows.

Profit margin 41.0%
Therefore cost of goods sold = 59.0%
Margin divided by cost of goods = markup 69.5%

How to Calculate Profit Margin from Markup

Calculating the margin from markup is an equally simple matter.

Markup 69.5%
add: 100% to markup 169.5%
Markup divided by (markup +100%) = margin 41.0%

 

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