Explanation
How Surcharge Calculator works
A percentage markup increases a base value by a share of that base. In pricing, the base may be a net purchase price or another defined cost base. An economically appropriate rate depends on the sector, cost structure and objective; the calculator does not recommend a blanket rate.
The crucial distinction is between markup, margin and contribution margin — three terms frequently confused in business. The markup (cost-plus percentage) always refers to the purchase price or cost base. The margin (trade margin) refers to the selling price. The contribution margin is the selling price minus variable costs. Example: With a purchase price of 100 EUR and a 50% markup, the selling price is 150 EUR. However, the margin is only 33.3% (50 out of 150), not 50%. This confusion regularly leads to miscalculations.
Since the markup is calculated on the cost base, percent-on-cost is not the same as percent-of-price. A 100% markup doubles the price and yields a margin of 50%. A 50% markup yields a margin of only 33.3%. This asymmetry is mathematically inherent: the markup grows linearly, while the margin asymptotically approaches 100% but never reaches it. For business owners this means a target margin of 40% requires a markup of 66.7% — not intuitive, but mathematically necessary.
In retail, the markup is commonly used for pricing. A retailer purchases goods at a buying price and adds a percentage to cover costs and profit. This calculation markup forms the basis of the trade margin.
Important: A 50% markup on the purchase price is not the same as a 50% margin. The margin (trade margin) refers to the selling price, the markup to the purchase price. With a purchase price of 100 EUR and a 50% markup, the selling price is 150 EUR, but the margin is only 33.3%.
A = G x p / 100The surcharge amount A is the base value G times the percentage p divided by 100.
E = G + AThe new value E is the base value plus the surcharge amount.
G = E / (1 + p / 100)When the new value and surcharge are known, divide by the surcharge factor.
p = (E - G) / G x 100New value minus base value gives the surcharge amount. Relative to the base value, this yields the surcharge percentage.
m = p / (100 + p) x 100The margin percentage is derived from the markup relative to the selling price. With a 50% markup, the margin is 50/150 x 100 = 33.3%.
The markup refers to the purchase price, the margin to the selling price. Both describe the same situation from different perspectives.