Markup and gross profit percentage are not the same! Also, the accounting for gross profit vs markup is different! A clear understanding and application of the two within a pricing model can have a drastic impact on the bottom line.

Markup percentage is the percentage difference between the actual cost and the selling price, while gross profit percentage is the percentage difference between the selling price and the profit.

Markup is a percentage of the cost.

Gross profit is the same amount expressed as a percentage of the selling price.

**Example:**

Item costs R100.00 and sells for R150.00.

Markup is R50 or 50% of the cost.

Gross profit is R50 but 33% of the selling price.

### How to calculate:

Markup % = (Selling price – cost price) / cost price x 100

Gross profit % = (Selling price – cost price) / selling price x 100

Gross Profit vs Markup Chart

15% Markup = 13.0% Gross Profit

20% Markup = 16.7% Gross Profit

25% Markup = 20.0% Gross Profit

30% Markup = 23.0% Gross Profit

33.3% Markup = 25.0% Gross Profit

40% Markup = 28.6% Gross Profit

43% Markup = 30.0% Gross Profit

50% Markup = 33.0% Gross Profit

75% Markup = 42.9% Gross Profit

100% Markup = 50.0% Gross Profit