Mark-up

Also called Markup

How much you add to a cost to get to a price, as a percentage of the cost. Always a bigger-sounding number than the margin it produces.

What it means

Mark-up is the amount you add on top of what something cost you, expressed as a percentage of that cost. Buy for £100, sell for £150, and the mark-up is 50%.

The margin on that same sale is 33%, because the £50 profit is a third of the £150 price. Mark-up divides by the cost; margin divides by the price.

Why it matters

Trade and retail talk in mark-up because it is how you build a price up from a supplier invoice. Accountants and investors talk in margin because it is how you compare businesses. Owners get caught in the middle and quote one when they mean the other.

The gap widens as the numbers grow. A 100% mark-up is a 50% margin. A 300% mark-up is a 75% margin. If someone tells you they "make 300%", they are describing a good business but not the one you are picturing.

What it looks like in practice

Converting between them: margin = mark-up ÷ (1 + mark-up). Mark-up = margin ÷ (1 − margin).

The everyday ones worth memorising: 25% mark-up is a 20% margin. 50% mark-up is a 33% margin. 100% mark-up is a 50% margin.

What to watch out for

A standard mark-up applied to everything. It is easy and it is wrong: it prices the fast-moving, easy items the same way as the ones that sit in stock for a year or need an hour of your time to explain.

Marking up your own labour at the same rate as materials. Materials are a cost you can reorder; your time is a fixed supply.

Where to get proper advice

This is one your accountant will happily settle in five minutes, and a bookkeeper can build the conversion into your quoting template so the decision is made once rather than on every job.