Gross Profit Markup

The mathematical relationship between Gross Profit Markup and Gross Profit Margin can be expressed as follows:

Gross Profit Margin (GM) = [Markup/(1 + Markup)]

Thus markup can be defined as an amount added to a cost price in calculating a selling price.

Thus;

Gross Profit Markup = Gross Profit/ Cost of Sales

However in an insurance concern Gross Profit Markup is calculated by dividing underwriting results by the net result of net earned premium minus underwriting resuls.

Gross Profit Markup                         =          Gross Profit  * 100   

                                                                      Cost of sales                          

                                                        =          Gross Profit   *   100

                                                                     Net Revenue- Gross Profit