Differences Between Markup and Margin

When selling products, the difference between the cost/wholesale price and the sell/retail price can be expressed as either the markup or the margin. Although they may sound similar, they are in fact quite different from one another.

The explanations below use a margin and markup percentage of 50%.

Margin

The margin is the difference between the retail price and the cost price. It is also known as gross profit (GP).

• Retail ($10.00) - Cost ($5.00) = Margin ($5.00)

To calculate the percentage (GP%):

• Margin ($5.00) / Retail ($10.00) x 100 = 50%

Margins are shown on numerous reports including:

• Detailed Takings Report
• Detailed Performance Report
• Sales Profitability Report
  

Markup

The markup is the percentage of the cost price, added on top of the cost price, to calculate a retail price.

• Cost ($5.00) + Markup (50% of $5.00 = $2.50) = Retail ($7.50)

The markup can be applied to each department and/or category:

• On the top menu bar of Retailer, click on Stock Maintenance -> Suppliers and Departments.
• Click on the magnifying glass to select a particular department.
• Enter the Markup % as required.
• Click Save.
  

To select a category instead:

• Click on the Categories tab.
• Enter the Markup % as required.
  
• Click Save.

The category's markup percentage takes precedence over the department's.

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