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.
Learn More On This TopicRead CFI's guide to learn about about markup, or browse CFI Marketplace for all the accounting worksheets available for download and use!
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