It’s really important to know what your gross profit percentage is to make sure you are making enough on each sale. The trouble is accountants and business owners seem to have language issue here and Gross Profit Percentage and Margin [or Mark up] get mixed up.
Let’s put this right, right now!
The gross profit percentage is the amount of profit on selling an item only taking into account only the cost of the sale divided by the price sold.
Eg Michael sells Jan a box of paper for £30.00 Michael purchased the box of paper for £15.00.
So Michael made a gross profit of £15.00 or a gross profit percentage of 50% [£15 into £30]
The markup was 100% because Michael purchases it for £15 and then added another £15 to arrive at the sale price.
