Example of Pricing Calculation Using Markup
You're in the chair-making industry, right? Here are the prices you calculated:
- To buy wood, you must spend $120.
- $60 for labor and supplies
- As a whole, it will set you back $180
of 50 percent is ideal. The formula for determining your selling price
is: $180 multiplied by 150% = $270.
Gross Profit of $90 ($270 minus $180).
Margin equals gross profit divided by selling price as a percentage – 33.3%.