hi I'm Steve Jones I'm going to tell you how to calculate markup first of all what is markup well when we purchase something as a business we buy something at a certain price then to make a profit we sell it and we sell it at a higher price maybe we do something with it in between so what we've got are a purchase price and a sale price the difference between these two is the difference in price if we then divide the difference in price by the purchase price this is what we call the markup so the question is how do we calculate it here's an example here's a purchase price let's say we have a purchase price of just $100 and let's say we sell this thing for a hundred and twenty dollars this is a nice business okay so our difference in price is $100 $120 is just $20 so for $20 I've got my increase in price but the purchase price was $100 so the proportion is in fact one-fifth I make an extra 1/5 of value by marking up the price now to work this out as a percentage which is the normal way it's expressed I have to multiply this expression by 100 and as we see we'll get 20 times 100 over a hundred so that's quite an easy calculation our marker in this case is 20% so I could say in business I mark up all my prices by 20% and then I know that something coming in at $2,000 I'm going to have a 20% markup which is something like $400 I would $2,400 so this is how markup works