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A $100 item sells for $150. What is its markup on cost?

The markup is 50 percent, while gross margin is about 33 percent.

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  1. About 33 percent
  2. 150 percent
  3. 50 percent ✔

Why: Markup divides the $50 gross profit by the $100 cost. Margin divides that same $50 by the $150 selling price, so the percentages differ.

Huh, didn't know that: Confusing a target margin with markup can produce a lower price than intended.

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References

Answer: 50 percent. Markup divides the $50 gross profit by the $100 cost. Margin divides that same $50 by the $150 selling price, so the percentages differ.

  1. IRS Publication 334, Tax Guide for Small Business www.irs.gov/pub/irs-pdf/p334.pdf
    First, divide gross profit by net receipts.
    Checked 2026-10-11.

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