This simple and easy-to-use Excel template will help you determine a company's markup by entering the required inputs. It is a great tool for beginners who want to learn about the basics of accounting and finance! Markup is the amount resulting from subtracting the cost of a product from its selling price and is usually expressed as a percentage. It is the price above the cost of goods sold which the seller charges on a product to make a profit. It is a critical metric companies look at when determining their pricing strategy to offset all operating expenses and generate profit.
Formula for MarkupThe metric can be calculated using the following formula: Markup Percentage = (Sales Price - Unit Cost) / Unit Cost x 100 Note that it is different from the gross margin, which is given by: Gross Margin = (Sales Price - Unit Cost) / Sales Price x 100 Markup measures the percentage difference between the cost of a product and the selling price, whereas gross margin measures the percentage difference between the selling price and profit. Generally, the markup of a company should be greater than its gross margin ratio.
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