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Costs, markup and margin
Cost includes parts, labor and an allocation for overhead. Markup divides profit above cost by cost; gross margin divides that difference by selling price. These percentages are not interchangeable.
A quoted price should explain included work and uncertain additional costs. Taxes, warranty obligations and fees can change the final economics; use applicable rules rather than assumptions.
Worked example
A part costs $40 and sells for $60. Markup is 20/40 = 50%; gross margin is 20/60 ≈ 33.3%.
Try it yourself
Calculate markup and gross margin for cost $80 and selling price $100.
Check your understanding
For cost $40 and price $60, what is markup?
Markup uses cost as its denominator.
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