What common mistake is made when calculating percentage markup?

When calculating percentage markup, a frequent oversight is failing to account for both the old price and the new price of the product. The percentage markup is typically calculated based on the cost price of the product (the old price) in relation to the selling price (the new price). If only one of these figures is considered, the calculation can lead to inaccurate results.

In a percentage markup calculation, you start with the cost price, determine how much higher the selling price is than the cost price, and then express that difference as a percentage of the cost price. Neglecting either the initial cost or the selling price can significantly distort the markup percentage and lead businesses to misprice their products or misinterpret their profit margins.

By ensuring that both the old price and new price are duly noted and calculated accurately, one can achieve a precise percentage markup. This understanding is crucial for setting prices strategically to ensure competitiveness while also achieving satisfactory profit margins.