4.3 Percentage margin and percentage mark-up


By the end of this section you should be able to:


● understand the diff erence between percentage margin and percentage mark-up


● solve problems involving both concepts


Margin and mark-up refer to the profi t (the diff erence between the cost and selling price) as a percentage of either the selling price or the cost price, respectively. As they both deal with the same numbers, it is easy to become confused.


Profi t = selling price – cost price


Margin and mark-up are more commonly expressed as a percentage. If the seller/supplier makes a profi t, the percentage will be positive. However, if they make a loss, the percentage will be negative.


Margin is calculated as a percentage of the selling price.


Percentage profi t margin = profi t where selling price = cost price + profi t


_________ selling price × 100


Mark-up is calculated as a percentage of the cost price.


Percentage profi t mark-up = profi t


_______ cost price × 100


Worked example 1 A golf store pays its wholesaler €40 for a certain club, and then sells it to a golfer for €75. Find: (i) the cost price


(ii) the profi t


Solution (i)


(ii) (iii) the percentage mark-up


(iv) the percentage margin


Worked example 2


An electronics shop buys refurbished mobile phones for €65 and sells them for €89. Calculate, to the nearest percent: (i) the mark-up for the phones


(ii) the percentage profi t margin.


The shop also sells eBooks. The cost of the eBook is €60, and the shop sells them with a percentage profi t margin of 25%.


(iii) Calculate the selling price of the eBook.


Solution (i)


(iii)


84


Linking Thinking 2


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