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Video : Mark Up and Margin – 2 Things You Never Want To Mix Up
In this video, Ciaran explains how mixing up your Mark Up and Margin could have a negative effect on your profitability.
How’s it going? Mark up and Margin. Two things that you never want to mix up. If you get the mixed up, you might find yourself having a lower profit than you thought you were going to make. I’ll give you a great example, if your cost was a 100 and your mark up on your cost was 25%, your sale price would be 125. Your profit is 25, 25 over 125 is 20% Margin. So your Mark up was 25%, your Margin was 20%. If you get those two things wrong, you might have only added on 20%, your Profit Margin would only be 16%, or add on a couple of zeros to that and you could get yourself into a very expensive muddle. Now simple hack, if you want to take Mark up and Margin, if you add on a half, you can take off a third. Add on a third, take off a quarter, and in the example, I added on a quarter, you can take off a fifth. Keeps going all the way. Very useful to have in your back pocket. Cheers for now.
Ciaran is a VirtualFD or freelance finance director for early stage companies. He’s on a mission to help business owners like you to Own Your Numbers. He won FD/CFO of the Year at the 2019 British Accountancy Awards.
Video: Mark Up and Margin – 2 Things You Never Want To Mix Up
In this video, Ciaran explains how mixing up your Mark Up and Margin could have a negative effect on your profitability.
How’s it going? Mark up and Margin. Two things that you never want to mix up. If you get the mixed up, you might find yourself having a lower profit than you thought you were going to make. I’ll give you a great example, if your cost was a 100 and your mark up on your cost was 25%, your sale price would be 125. Your profit is 25, 25 over 125 is 20% Margin. So your Mark up was 25%, your Margin was 20%. If you get those two things wrong, you might have only added on 20%, your Profit Margin would only be 16%, or add on a couple of zeros to that and you could get yourself into a very expensive muddle. Now simple hack, if you want to take Mark up and Margin, if you add on a half, you can take off a third. Add on a third, take off a quarter, and in the example, I added on a quarter, you can take off a fifth. Keeps going all the way. Very useful to have in your back pocket. Cheers for now.
Ciaran is a VirtualFD or freelance finance director for early stage companies. He’s on a mission to help business owners like you to Own Your Numbers. He won FD/CFO of the Year at the 2019 British Accountancy Awards.
