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Published: Fri, March 03, 2017
World | By Lorena Waters

How to Calculate Markup Cost | Chron.com

How to Calculate Markup Cost | Chron.com

Calculating markup allows a company to price goods to make a profit.

calculator image by gajatz from

Markup is one of the best ways to make money online. By having markup on goods, a company is able to earn profits. If the company sold goods for what they cost, then the company & amp; amp; # 039; s revenues would match expenses, not earning any profit. As an example, a company pays $ 5 for widgets. The company wants a 10 percent profit on the goods.

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1. Determine the markup the company wants and the cost of the good. In the example, the cost is $ 5 and the markup rate is 10 percent.

Subtract 1 from the markup rate. In the example, 1 minus 10 percent equals 90 percent or 0.9.

Divide the cost of the product by the number calculated in Step 2. In the example, $ 5 divided by 0.9 equals $ 5.56. About the Author

Carter McBride started writing in 2007 with CMBA's.

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