The markup (MU) is the expression of the selling price gained through an increase of the purchase cost in other words how much do I have to increase the percentage cost in order to define the selling price. Unfortunately to align ourself to the market, either I decide the selling price and then I look out at the markup I get or I negotiate the purchase price in order to get an established markup.
In a nuthshell the markup derives from: the selling price – the cost.
MU in percentage is the differnce between the SELLING PRICE and the PURCHASE COST compare to the purchase cost.
MARKUP = SELL – COST
MU % = (SP-PC)/PC X 100
Thus far everything ok, but take care of VAT and whether there is a pension fund: therefore these are after tax calculations.
The following example is intended to explain better this concept:
We sell a toy at the price of 500 euros and we paid it 400 euros. Apparently we’ve got a 100 euros margin but this is not true!. the real difference has to be calculated between the purchase taxable income and the selling one.
In a nutshell, the markup is 81,97 euros and the percentage markup is 25%
Let’s check the formula out:
MU = [(SP-PC)/PC]*100= [(409,84-327,87)/327,87]*100= 25 %
What a shame!
That’s what M&R app is for! Both M&R free and M&R professional
It’s very easy: insert 400euros in the purchase list, 500 euros in the selling field, click on the tick and that’s all! You will get a 20% margin in other words 81,97 euros.
If you start using the free M&R app you won’t do without the professional one!.
You find Free and Professional M&R version on Apple Store