Practice Difference between markup and margin calculations independently with minimal teacher support
Time to build fluency with markup and margin calculations! You'll work through problems that vary the numbers algorithmically until you can calculate both percentages reliably. This is the same procedural fluency you'll need for break-even analysis in the next lesson.
Fluency Goal
5 consecutive correct answers
Skill Target
Distinguish markup from margin
Preparation
Ready for break-even next
Cost
$72
Selling Price
$94
Profit
$22
Calculate the MARKUP percentage:
(Round to the nearest whole number)
Markup Formula
(Price - Cost) ÷ Cost × 100%
Profit as % of what you paid
Margin Formula
(Price - Cost) ÷ Price × 100%
Profit as % of what customer pays
Once you can calculate margin reliably, you're ready for break-even analysis. The key connection: margin tells you how much of each revenue dollar is profit available to cover fixed costs.
Contribution Margin
Your margin on each project is the "contribution" it makes toward covering Sarah's fixed costs (office, salary, insurance). Every project at 40% margin contributes $0.40 of each dollar toward the fixed cost floor.
Break-Even Formula
Fixed Costs ÷ Contribution Margin = Break-Even Point (in units or dollars) You'll practice this in Lesson 3 — but first, make sure markup and margin calculations are automatic.
What Sarah Now Knows
With reliable markup and margin skills, Sarah can quickly evaluate any pricing proposal, understand what percentage of revenue she actually keeps, and defend her prices to investors using the language they speak: margin.