Do you know your margins and mark-up?

by on 18/03/2014

markupmargin And now for something completely different, – Monty Python!

Here is a simple test to check your numbers.

Do you know your margin and mark-up?

Even some accountants struggle to explain this.

Many business owners believe that if they mark-up their product by 20% that their margin is the same.

No.

In this case 20% mark-Up will produce a profit margin of 16.7%!

It is important you know this. Otherwise you could end up not making any profits.

Here is a worked explanation.

Mark-up is based on cost.

Widget A costs 100.

Your MARK UP is 20 (20%)

Your selling price is 120.

Your MARGIN is based on sales.

Selling price 120

Profit 20

Margin 16.7% (20/120 %)

Hope this explains.

Don’t let me baffle you!

 

{ 0 comments… add one now }

Leave a Comment

Current day month ye@r *

Previous post:

Next post: