How to Figure Markup Margin
Margin and markup are two measures of profitability. You can use them for a specific product, a specific time period, or the entire company. The markup measures the profit as a percentage of the cost, while the margin measures the profit as a percentage of the revenues. As a result, the markup will always be larger than the margin. Therefore, when comparing profit rates for different years or different products, be sure to clarify which margin you are using.
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Instructions
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Subtract your costs of goods sold from your total revenues to find your profit. For example, if you have sales of $100,000 and the items you sell cost $75,000, your profit equals $25,000.
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Divide the profits by the costs of the goods to find the markup rate. In this example, divide your profit of $25,000 by the cost of $75,000 to get 0.3333, or about 33.33 percent.
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Divide the profits by the total sales to find the margin. In this example, divide your profit of $25,000 by your revenues of $100,000 to get 0.25, or 25 percent.
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