How to Quickly Calculate Your Markup

By Matt Steffen | Daily Marketing Advice

With regard to pricing, it's always amazing to me how many new business owners don't know what their own markup on items is.

Now, I can almost understand this mistake coming from service-based industries with value-based fees and cost plus billing structures which can lead to a significant difference in markup based on the client.

However, if you do have seemingly fixed costs, you should be aware of what your markup is, and how it dictates how much profit you earn.

So, let's say you buy jeans for $10 from a manufacturer, and you mark it up by 50%. In other words, the final price tag will be $15.

Now, the way to arrive at this number is to calculate: [Cost x 1.(markup %)].

You see, by adding that "1" before the percentage, we can do 2 steps at once because we're adding an entire 100%.

So, to quickly do the calculation above in one step, you would calculate:

 

$10 (cost) x 1.50 (50% markup) = $15 (Final Price)

 

So, let's do another one.

You have to purchase 10,000 surge protectors, costing $16 each, for your department store, and wish to mark it up by 22%.

What is the final price?

 

$16 x 1.22 = $19.52

 

 

See, math isn't so bad, is it?

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