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The markup from the wholesale price you pay for goods to the retail price at which you sell those goods is the lifeblood of your business. You want to set prices that are competitive and at the same time make enough profit margin to cover your costs and leave a profit for the business.s a percentage, the profit margin is 15 divided by 25, or 60 percent. Profit margin is always calculated from the retail price and is the money coming in to run your business.
How to Calculate Markup Percentage. By definition, the markup percentage calculation is cost X markup percentage, and then add that to the original unit cost to arrive at the sales price. The markup equation or markup formula is given below in several different formats. For example, if a product costs $100, the selling price with a 25% markup would be $125. Gross Profit Margin = Sales Price â Unit Cost = $125 â $100 = $25. Markup Percentage = Gross Profit Margin/Unit Cost = $25/$100 = 25%. Sales Price = Cost X Markup Percentage + Cost = $100 X 25% + $100 = $125. One of the pitfalls in using the markup percentage to calculate your prices is that it is difficult to ensure that you have taken into consideration all of your costs.