Mark Up on Costs (MU)

Markup on costs is the percentage added to the cost of goods to cover overhead and profit. For retailers, it represents the difference between the cost of purchasing or manufacturing a product and its selling price.

 

To calculate markup on cost, you can use the following formula:

 

For example, if a retailer buys a product for $50 and wants to sell it for $75, the markup on cost would be:

(($75 - $50) / $50) x 100 = 50%

 

Markup is important for retailers because it directly affects profitability. It must be high enough to cover all the business's costs, including overhead, and provide a profit margin, but not so high that it drives customers away. Retailers need to find the right balance to remain competitive while ensuring the sustainability of their business.