Markup is the difference between the selling price and the original cost of an item. It can be calculated by subtracting the cost from the selling price or by using a percentage. To calculate the percentage, divide the increase rate by the original amount.
Markup is a number that represents the difference between the total selling price of an item and the original cost to purchase or produce that item. For example, a retailer may purchase computers with the intention of selling them to consumers. In order to earn a profit on these sales, he marks the computers up at a higher price than he paid for them. The amount it adds is called the markup. To calculate an item’s markup, a person can subtract the item’s original cost from its selling price, or they can work with a percentage, by multiplying a number representing the markup percentage by the cost, and then adding that amount to the original cost.
The easiest way to calculate markup is to use subtraction. For example, a reseller might purchase a phone with a suggested retail price of $30 US Dollars (USD). If the retailer paid $15 USD for the item, they can subtract its cost from the suggested retail price to get the markup amount. In this case, the markup amount would be $15 USD.
In some cases, a reseller may also want to know what the markup percentage is. To calculate the markup in that case, he could divide the amount you paid by the suggested retail price. If your cost of providing a service was $25 USD, for example, and your selling price was $40 USD, you can start your calculations by subtracting $25 USD from $40 USD to calculate the rate of increase. , in this case $15 USD. Then he would divide the increase rate, $15 USD, by the original amount and come up with 0.6, or 60 percent, which would be his percentage markup.
Sometimes, a person may want to apply a percentage to the original cost of an item or service and then calculate the markup. For example, a person may start with an item that costs $5 USD to purchase or produce and wants to increase it by 25 percent. To calculate this amount, he would change the percentage to decimal by shifting the decimal place two places to the left; this changes the number from 25 to 0.25. Then, he would multiply this number by the $5 USD to buy or produce the item or service; the answer would be $1.25 USD. $1.25 USD is the markup for the item, and the person could add the $1.25 USD markup to the cost to arrive at the total sales price of $6.25 USD.
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