Markup is a term used in business to describe the difference between the selling price of a good or service and its cost). It is often expressed as a percentage over the cost). Markup is what businesses add to prices to make a profit. It is entered as a decimal and determines how much money a business makes on each sale, ending up being the gross profit. Markup can be expressed as a fixed amount or as a percentage of the total cost or selling price). Markup percentage measures the gap between what an item costs the seller and the price charged to the end customer. A good markup percentage is one that results in prices customers are happy to pay, plus enough gross profit to keep a business going and growing.

Markup is different from profit margin, which refers to the revenue a company makes after paying the cost of goods sold (COGS) . Markup is the percentage amount by which the cost of a product is increased to arrive at the selling price. Gross margin, on the other hand, is the difference between a product’s selling price and the cost as a percentage of revenue.

Understanding markup is important for businesses, as it helps establish a good pricing strategy, which is one of the most important tools a profitable business can have. Markup percentage varies greatly depending on the industry, and there is no “normal” markup percentage that applies to all products, although there may be an average for a particular industry.