Academy›💰 Money and records

Pricing for profit

Margin, markup and putting VAT in the shelf price.

⏱ 7 min Lesson 3 of 4

Cost = buying price + transport + packaging + loss. Not just what the supplier charged.

Markup is profit as a share of cost: buy at 80, sell at 100 → 25% markup.

Margin is profit as a share of the selling price: same item → 20% margin.

If you are VAT-registered, add 20% to your pre-tax price, then round.

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📌What you need to know

Markup and margin are different numbers for the same sale — know which one you mean.
To get a target margin, divide cost by (1 − margin): a 30% margin on a GH¢70 cost is 70 ÷ 0.7 = GH¢100.
When suppliers raise prices, update yours the same week.
A discount comes straight out of margin: 10% off a 20% margin item halves your profit.

In Ghana: the numbersChecked 14 October 2026

MarkupProfit ÷ cost

MarginProfit ÷ price

VAT-inclusive pricePre-tax price × 1.2

Pricing on the supplier price alone.

Copying the shop next door's price without knowing your own cost.

Giving discounts without checking the margin.

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Tip. Know the margin on your top 20 items by heart. They make most of your money.

Do it in DatanaDatana handles this part for you.