Markup
In one sentenceThe percentage added to an item's cost to arrive at the selling price; it is calculated on cost, not on the selling price, unlike profit margin.
Simply put
If an item costs 80 SAR and you add 25%, the selling price is 100 SAR. But the profit itself (20 SAR) equals only 20% of the selling price.
This difference causes many pricing mistakes: anyone who wants a 25% margin on the selling price must add more than 25% to the cost.
Worked example
A spare parts store buys a filter for 80 SAR and adds 25% to it.
Markup = 80 × 25%20 SAR
Selling price = 80 + 20100 SAR
Profit margin on selling price = 20 ÷ 10020%
Selling price at a 25% markup100 SAR
Formula: Selling price = Cost × (1 + Markup percentage)
Don't confuse it with
Gross profit marginMargin is divided by the selling price and markup by the cost, so the same amount gives two different percentages.
in FullScreen ERP
Smart pricing suggests the selling price based on cost, supplier prices and item movement. Purchasing and suppliers