Profitability
Markup from margin
Converts a gross margin into the equivalent markup on cost, which is the figure used when pricing from cost.
The Formula
markup = GM / (1 - GM)
Converts a gross margin into the equivalent markup on cost, which is the figure used when pricing from cost.
| Symbol | Meaning | Unit | Notes |
|---|---|---|---|
| M | Markup | ratio | Gross profit as a share of cost. |
| GM | Gross margin | ratio | Gross profit as a share of revenue. |
What Each Symbol Means
Mratio
Markup
Gross profit as a share of cost.
GMratio
Gross margin
Gross profit as a share of revenue.
See It Worked With Real Numbers
A formula on its own does not tell you which number goes where. The how to calculate gross margin page applies this equation to a concrete case, shows every intermediate step, and names the mistakes that produce a wrong answer even when the algebra is right.
Where This Formula Appears
This equation is the working core of How To Calculate Gross Margin, filed under Business. Every number the guide produces comes from substituting into this one line.