My name is Ian and I have a markup question for you. I work for a painting company, specifically I estimate cost and sell painting projects. Within our office, we've had some discussion on how markup should be calculated for materials that we include in our prices. These are the two scenarios that we've come up with.
1. Mark up as a percentage of the cost: Cost = $ 10.00 X 15% Markup = $ 1.50. $ 1.50 + $ 10.00 equals $ 11.50 as a sale price.
2. Selling Price = Cost / (1-the desired profit margin). This would equal to $ 10.00 / (1-.15) = $ 11.76 roughly.
If you have any information on whether one is more correct and why, I would appreciate this. I want to make sure that I am marking things up correctly.