# Profit Margin & Markup Analysis

The Profit Margin & Markup Analysis is a tool that helps a business determine the profit, the profit margin and the markup percentage for a product or a group of products sold.

The average values are calculated as a weighted average (it takes in the consideration the quantity purchase and/or sold).

## Definitions and terms used in the Profit Margin & Markup Analysis

**Product**: the name of the product.**Quantity**: the number of units expected to be purchase and/or sold.**Purchase Price**: the total cost of product (per unit).**Selling Price**: the price that a unit should be sold for.**Markup**: the amount added to the cost of a product to cover expenses and profit in fixing the selling price. Markup is equal to profit.**Markup percent**: the ratio calculated as Markup divided by Total Cost. It measures how much is added to the cost in order to determine the selling price.

Markup percent = (Total Revenues - Total Cost) / Total Cost x 100**Profit**: the benefits from producing or selling a number of units.

Profit = Total Revenue - Total Cost**Profit margin**: the ratio of profitability calculated as Profit divided by Total Revenue. Profit margin is an indicator of a company's pricing policies and its ability to control costs. It measures how much out of every dollar of sales a company actually keeps in earnings (expressed as a percentage).

Profit Margin = (Total Revenues - Total Cost) / Total Revenues x 100

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