You can set the Item Markup on items in our software to calculate the Price per item, for example you could have an item with a Cost per item of £100 and an Item Markup of 50%, this would set the Price per item to £150 as shown in the following example.
Occasionally people will get Markup and Profit Margin confused and think these two values should match each other (i.e. a Markup of 50% should result in a Profit Margin of 50%) so they are unsure why the values do not match each other in our software as per the example below.
As you can see, even though the Markup on the item is 50%, the Profit Margin is only 33.33%, this is because the total cost of the item is £100, the total price is £150 and therefore the total profit is £50.
If you do the calculation for the profit margin you can see that £50 is 33.33% of £150 which is where the Profit Margin percentage value comes from.
The Profit Margin can never be more than 100% (whereas the Markup can be any value).
The Profit Margin would only ever be 100% if the Cost was £0. You could increase your Markup on an item to 500% but that would still only make the Profit Margin 83.33% as per the example below.
Hopefully this helps explain any confusion between the two values and why they do not match each other.
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