In our Focus on Viability series, we explore the financial foundations that keep your business thriving. One of the most common misunderstandings is the difference between markup and profit. Understanding the distinction can have a big impact on your pricing strategy — and ultimately, your business sustainability. And to make it deliciously relatable, let’s use a bowl of jajangmyeon (noodles in black bean sauce) to walk through the concept.
Markup: The Increase Over Cost
Markup is the percentage added to your cost price to determine your selling price — helping to ensure you cover costs.
Formula: Markup % = [(Selling Price – Cost) ÷ Cost] × 100
Example: If it costs $20 to produce jajangmyeon and you apply a 50% markup, the selling price would be $20 + (50% of $20) = $30
Takeaway: Markup is cost-based — it’s a pricing strategy.
Profit: What You Actually Keep
Profit is what’s left after all costs (fixed and variable) are deducted from your revenue.
Formula: Profit = Revenue – Total Costs
Example: You sell that same bowl for $30. But when you factor in marketing, rent, and labour, your total cost is $25. Your profit is $30 – $25 = $5
Takeaway: Profit is your bottom line — what you actually earn.
What Happens When You Mix Up Markup and Profit?
Mixing these two up can lead to costly miscalculations. Here’s how:
Under-pricing Your Offerings
If you mistake markup for profit, you might set prices too low.
💡 Consequence: You’re not covering your full costs, leading to cash flow issues.
Overpricing and Losing Customers
If you base markup on selling price instead of cost, you might overcharge.
💡 Consequence: Your pricing may seem out of sync with the market.
Misreading Your Business Health
Assuming markup equals profit margin may mislead you.
💡 Consequence: You might think your business is more profitable than it is.
What Jajangmyeon Teaches About Value-Based Pricing
In the TV series No Taste Like Home, Antoni Porowski explores celebrities’ food heritage. In one episode, he shares jajangmyeon with Awkwafina — a dish with roots in her Chinese and Korean background.
Jajangmyeon is so beloved in Korea it even has an unofficial holiday: Black Day, where singles gather to enjoy it together. But this dish isn’t just about ingredients — it carries memory, story, and emotion.
Now, imagine a restaurant serving jajangmyeon shares this story — the migration of the dish, its cultural significance, and personal meaning. Wouldn’t you feel more connected? More willing to pay?
That’s the essence of value-based pricing. Beyond the numbers, pricing is about perceived value — an emotional, cultural, and human connection. Storytelling turns a bowl of noodles into something far more meaningful than a cost-plus-markup dish.
Curious About Your Business Viability — or Want to Share a Food Story?
If you’re thinking about how to balance the value you bring with sustainable pricing — or if you have a beautiful food story tied to your heritage — I’d love to connect.
📅 Book a call here.
💬 Remember:
Price is what you charge.
Value is what they remember.
Profit is what keeps you going.
