---
title: Profit Margin Pricing versus Markup from Cost
description: Let's address questions about differences between Profit Margin Pricing and Markup from Cost.
image: https://www.pacecomputer.com/hs-fs/file-3053609803-jpg/images/margin_of_profit-resized-600.jpg
---
[](https://www.pacecomputer.com)
# News & Updates
## [Profit Margin Pricing versus Markup from Cost](https://www.pacecomputer.com/blog/bid/361325/Profit-Margin-Pricing-versus-Markup-from-Cost)
Mon, Mar 9, 2015 @ 09:03 AM / by [Christine Lowell](https://www.pacecomputer.com/blog/author/christine-lowell)
- [Tweet](https://twitter.com/share)
***Margin of Profit vs. Mark up From Cost***
*The mystery solved!*
A frequent request from our customers is for assistance with setting markups. This question usually leads to a deeper discussion about Profit Margin Pricing versus Markup from Cost. If you’ve ever found yourself asking some of these same questions, read on...
**PROFIT MARGIN**
If you work on a 40 percent profit margin then you would charge $16.67 for an item that you paid $10.00 for. Use the formula below to calculate your margin:
| | EXAMPLE |
| --- | --- |
| • TAKE YOUR COST (the price you paid) | 24.50 |
| • DIVIDE THAT BY THE PRICE YOU WOULD | / |
| LIKE TO CHARGE AT THIS RETAIL LEVEL | 98.00 |
| • THE RESULT IS | 0.25 |
| | |
| • DISREGARD THE DECIMAL AND | 100 |
| SUBTRACT THAT AMOUNT FROM 100 | -25 |
| | 75 |
| • TOTAL WILL BE YOUR PERCENTATION OF MARKUP FROM | **75%** |
| COST WHICH SHOULD BE ENTERED IN THE APPROPRIATE | FIELD |
In this case, by entering 75% in the field, the system would calculate the retail price to a number that would be 75% profit.
**MARK UP FROM COST**
If you work on a mark up from cost then you would charge $15.00 from and item that you paid $10.00 for.
| | EXAMPLE |
| --- | --- |
| • TAKE THE PRICE YOU WOULD LIKE TO CHARGE | 15.00 |
| • SUBTRACT THE COST YOU PAID | -10.00 |
| • THE RESULT IS | 5.00 |
| | |
| • DIVIDE THE RESULT | 5.00 |
| • BY THE ACTUAL COST | /10.00 |
| | .50 OR 50% |
| • 100 IS THE BASE PERCENTAGE | 100% |
| • ADD THE ADDITIONAL PERCENTAGE | 50% |
| • TOTAL MARKUP FROM COST PERCENTAGE | **150%** |
In this case you would enter the percentage as 150%. That means that the system will take the 100% of cost you paid and add 50% of the cost to it.
[Click here](https://www.pacecomputer.com/hs-fs/file-3053610123-pdf/docs/yes_margin_of_profit.pdf) to download a Profit Margin Pricing vs Markup from Cost Quick Reference Guide.
Topics: [Pace Software](https://www.pacecomputer.com/blog/tag/pace-software), [Profit Margin Pricing](https://www.pacecomputer.com/blog/tag/profit-margin-pricing), [Markup from Cost](https://www.pacecomputer.com/blog/tag/markup-from-cost)
#### Written by [Christine Lowell](https://www.pacecomputer.com/blog/author/christine-lowell)
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