Follow up to markup question....

[emahler]

the point is not the percentage itself, but the way you apply it.

i really don't call it markup, i call it margin. and it's not misleading at all. at the end of the year, I want a 30% margin (profit) on the material I sell.

if I spend $100,000 on material, and sell it with a 30% markup, I generate $130,000. But my margin is only 23%. Or in other words, I only made 23% profit on the $130,000 in revenue. Or 30,000/130,000 = 0.23

Here is a good article on it from EC mag.

If I spend $100,000 on material, and sell it with a 30% margin, I generate $142,857. I now make 30% profit on my sale price (or margin). or $42,857/$142,897 = 0.30

With markup I misjudged my profits and at the end of the year I come up short.

My goal is to make money. To make a profit. Your number might be 10% or 50% or 100%, but there is a big difference between markup and margin.

 

[JohnE]

i really don't call it markup, i call it margin. and it's not misleading at all. at the end of the year, I want a 30% margin (profit) on the material I sell.
.

It was misleading for the purpose of this thread.:grin:

I was reading it and agreeing with Dennis completely. But after reading your last post, I don't disagree with you either. You guys were kind of discussing 2 different points.

But I really agree with Marc and the use of a sliding scale.