How this calculation works
Selling price before VAT = cost × (1 + markup). Profit is selling price less cost; profit margin divides that profit by selling price, not cost. Optionally add standard 15% VAT.
A worked example
R100 cost marked up by 50% sells for R150 before VAT, with a 33.33% margin. Including 15% VAT, the customer price is R172.50.
Assumptions & limitations
- Markup and margin use different denominators. Unit cost must include relevant business costs for your purpose. Add VAT only if registered and making standard-rated taxable supplies.
