What is Markup?
Markup is the amount added to the cost price to get the selling price, usually expressed as a percentage of cost.
Updated
Meaning
English
Markup is the amount added to the cost price to get the selling price, usually expressed as a percentage of cost.
Roman Urdu
Markup woh raqam hai jo cost price par laga kar selling price banti hai, aam taur par cost ka percentage.
Also called mark-up, cost plus, munafa percentage.
Example
A garments shop buys a shirt for 1,600 rupees and applies a 50% markup, so it sells for 2,400. The margin on that sale is 800 divided by 2,400, which is 33%, not 50%.
How it works
Many Pakistani shopkeepers price by markup because it is easy at purchase time: "cost plus 20%". It works well when costs are known and stable. The risk is confusing it with margin when planning: if the shop needs a 25% margin to cover rent and salaries, a 25% markup will fall short.
To convert: margin equals markup divided by (100 plus markup). A 20% markup is a 16.7% margin; a 100% markup is a 50% margin. Use markup to set prices, and margin to judge whether the business earns enough.
In Nafaa
The price step of the Nafaa product editor has markup chips (for example 10%, 15%, 20%, 25%) that set the selling price from the cost in one tap, and shows the resulting profit and margin.
Related terms
- Gross Margin
Gross margin is gross profit shown as a percentage of the selling price: (selling price minus cost) divided by selling price.
- Landed Cost
Landed cost is the full cost of getting goods into your shop: the purchase price plus freight, loading, duties, taxes that cannot be claimed back, and other charges, less any discount.
- Wholesale Price
A wholesale price is the lower price charged to buyers who purchase in bulk or resell the goods, such as retailers, contractors or institutions.