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Markup vs. Margin | Contrax Blog

Written by John Clark | Oct 10, 2018 4:00:00 AM

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.