WORKBENCH GUIDE
Margin and markup on cost
Adding 25% to cost does not produce a 25% sales margin.
Margin divides profit by selling price. Markup divides the difference between price and cost by cost. When fees and taxes are charged on sales, they share the sales-price denominator with margin. In the budget, labour is hours multiplied by hourly rate; additional overhead is an absolute amount. Use full-batch purchase cost when waste is not resold.
Reset example
Cost 100 and 25% margin, without charges: price 133.33; markup 33.33%. A price of 125 would produce a 20% margin.