# Profit Margins Question

**URL:** <https://forum.manager.io/t/profit-margins-question/4249>\
**Category:** Uncategorized\
**Created:** [December 11, 2015, 3:14am UTC](https://forum.manager.io/t/profit-margins-question/4249 "2015-12-11T03:14:23Z")\
**Posts on this page:** 4\
**Page:** 1

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**Author:** ![The\_Tank](https://avatars.discourse-cdn.com/v4/letter/t/f08c70/32.png) [@The\_Tank](https://forum.manager.io/u/The_Tank)\
**Post date:** [December 11, 2015, 3:14am UTC](https://forum.manager.io/t/profit-margins-question/4249/1 "2015-12-11T03:14:23Z")

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I was taking a look at my profit margins in the reports and there is something that I do not understand. It shows something that has 100% markup as only 50%. For example, lets say I purchase something for $15 and sell it for $30. That is what I consider a 100% markup but it shows in the reports as only a 50%. Is there something I’m missing? I’m no accountant so maybe there is something that I’m missing. Thanks for any help here!

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**Author:** ![lcprop](https://avatars.discourse-cdn.com/v4/letter/l/3da27b/32.png) [@lcprop](https://forum.manager.io/u/lcprop)\
**Post date:** [December 11, 2015, 5:39am UTC](https://forum.manager.io/t/profit-margins-question/4249/2 "2015-12-11T05:39:52Z")

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Hi . in regards to your markup and profit margin report . it is correct . if you mark up something 100% then your G/P (Gross profit / profit margin )will be 50% . and if you mark up something 200% your g/p will be 66.6%  
Remember the G/P and the marke up in cash value will be the same eg item cost $1. and you sell it for $2 you G/P and mark up is $1 (2-1=1)  
But the G/P and mark up % won’t be the same. e.g  
when you do a mark up on an item your are working a % in relation to the cost price .  
but when you work out the g/p (profit margin) of the item you are working a % in relation to the selling price (not the cost price)  
e.g  
Let say an item cost you $1 and you mark it up by 50cent and sell it for $1.50.  
so to work out the mark up you dived the 50cent profit by the cost price and time by 100 (50c/100c=50x100=50%)  
but to work our the g/p % (profit margin), you take the 50 cent profit and you dived it by the selling price (not the cost price ) and times the answer by a 100 (50/150=0.333X100=33.3%

I hope you can understand my explanation in regards to profit margin and mark up %

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**Author:** ![The\_Tank](https://avatars.discourse-cdn.com/v4/letter/t/f08c70/32.png) [@The\_Tank](https://forum.manager.io/u/The_Tank)\
**Post date:** [December 13, 2015, 1:21am UTC](https://forum.manager.io/t/profit-margins-question/4249/3 "2015-12-13T01:21:55Z")

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Makes sense now @lcprop. Thanks!

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**Author:** ![Ealfardan](https://sea1.discourse-cdn.com/flex019/user_avatar/forum.manager.io/ealfardan/32/63166_2.png) [@Ealfardan](https://forum.manager.io/u/Ealfardan)\
**Post date:** [January 18, 2023, 3:35pm UTC](https://forum.manager.io/t/profit-margins-question/4249/4 "2023-01-18T15:35:36Z")

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Closed on January 18, 2023, 3:35pm UTC