Margin = (selling price- cost)/ selling price
A margin is the % of the profit above the cost
A % of the sellers price
Sales: Seller
Margin in excel= 1-(1/markup)
Markup= (selling price- cost price)/ cost price
To calculate the profit required take the cost of the item and increase by % of cost to determine the profit
A cost multiplier
Cost: Buyers
Markup in excel = (1/(1-gross margin)
Note the markup is generally always higher than the margin
To derive the general markup %, take the desired margin and divide by the cost of the goods
for example
Laptop= £100
Margin = £20
£20 margin divided by £100 cost price= 20%
£100 X 1.20= £120
Generally a markup overstates the profitability of a firm
