If you understand the difference between margin and markup you can stop reading.
A Markup/Margin Refresher
If you don’t understand and don’t want to admit it don’t worry here is a quick lesson (you would be amazed at how many people in the world today often mix the two up).
It’s really quite simple:
Margin is the share of total price, while markup is the share of cost. To explain further, if you have a consultant whose pay rate is $100 and their bill rate is $125, then……..
Markup = 25% of the cost ($25 / $100).
Margin = 20% of the bill rate ($25 / $125).
So you can see how making a mistake here can cost a company a ton. Understanding this basic concept is business critical. Especially when you get exposed more and more to vendor relationships.
