Accounting ratio
Mark-up
The profit added to the cost of goods, expressed as a percentage of that cost.
What the exam boards say
- Cambridge 0452 and 0985, 2027 to 2029: listed. Formula as printed: Gross profit / Cost of sales x 100.
- Cambridge, 2026 syllabus: listed. Formula as printed: Gross profit / Cost of sales x 100.
- Pearson Edexcel 4AC1: not named in the specification.
- OxfordAQA 9215: named as "markup %"; the formula is in OxfordAQA's separate guide, Formulae for accounting ratios.
Cambridge states that for 2027 to 2029 the printed formulas are the only ones accepted in candidate responses, so use the wording above for a Cambridge paper.
Sources: Cambridge IGCSE Accounting 0452: syllabus for 2027-2029 (Version 1), pages 18, 21; Cambridge IGCSE Accounting 0452: syllabus for examination in 2026 (Version 2, December 2025), page 19; Pearson Edexcel International GCSE in Accounting (4AC1) specification (FT Sept 2017) (Issue 1, October 2016), page 21; OxfordAQA International GCSE Accounting (9215) specification (FT Sept 2024) (Version 1.2), page 18. See all sources.
Worked example
Gross profit RM20,000 on cost of sales RM30,000 → (20,000 ÷ 30,000) × 100 = 66.7%.
How to interpret it
Mark-up is a pricing view of profitability. It is always higher than the margin for the same figures; watch which one a question asks for.
Using it in analysis
Mark-up is the ratio a trader thinks about when setting a selling price. An analyst uses it to check whether the pricing policy is being followed. Compare it across several years for the same business, or with a similar business selling similar goods.
A rising mark-up usually means the business charges more relative to what it pays, perhaps because it moved into premium lines or has less competition. A falling mark-up often means stronger competition or an attempt to clear slow stock.
Example: cost of sales is RM160,000 and gross profit is RM64,000, so the mark-up is (64,000 ÷ 160,000) × 100 = 40%. If the owner says the policy is a 50% mark-up, the shortfall suggests discounts or goods sold cheaply or lost. Later, cost of sales of RM200,000 with gross profit of RM100,000 gives 50%, which is back on policy.
The most common mistake is confusing mark-up with margin. They use the same gross profit but a different base. In the example just given, the 50% mark-up equals a margin of only (100,000 ÷ 300,000) × 100 = 33.3%. Reading mark-up as if it were margin overstates how much of each sale is profit. Mark-up also ignores overheads and says nothing about how much stock sells.
It shows pricing decisions in advance. Goods costing RM50 with a 60% mark-up give a profit of RM30 and a selling price of RM80. A 30% mark-up gives a profit of RM15 and a price of RM65. Read next to gross margin, mark-up separates a deliberate pricing decision from leakage through discounts, wastage or theft. A service business with little cost of sales rarely uses it.
Limitations
Like gross margin, it ignores operating expenses.
Related ratios
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