Margin vs markup: use the right denominator
Margin and markup answer different questions. Confusing them can make a price look healthier than it really is.
Back to all briefsMargin divides profit by revenue. Markup divides profit by cost. Both can be useful, but they should not be used interchangeably.
Use margin to evaluate the sale
Profit margin shows how much of the selling price remains after cost. It is helpful for comparing jobs, products, and discounts.
Use markup to build a price from cost
Markup starts with cost and adds a percentage on top. It is practical when you know the cost first, but it should be checked against margin.
Add fees before deciding
Payment fees, platform commissions, returns, and delivery costs can lower the effective margin after the quote or checkout is complete.
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