M ARGIN VS. M ARKUP Avoid the pitfalls and increase your bottom line. 75% OF CONTRACTORS DON'T KNOW HOW TO PROPERLY ESTIM ATE THE M ARKUP THEY'LL NEED. Builders are often confused when it comes to margin and markup. The two terms reflect profit differently. Financial experts estimates that at least 75% of installation contractors don?t know how to estimate the markup they?ll need to cover job costs plus overhead and still turn their projected profit margins. Read t hrough our "Margin Vs. Markup" cheat sheet for everyt hing you need t o know.
LET'S TALK TERMINOLOGY. The t erms you need t o know before you can calculat e margins and markups.
Revenue:
COGS:
Gross Profit :
Earnings before deduct ing cost s
Cost s t o creat e sales it ems
Revenue - COGS
M ARGIN
M ARKUP
Margin shows the revenue earned after paying the COGS as a percentage of the gross profit.
Markup shows how much more your selling price is than the amount sale items cost you.
(Gross Profit / Revenue) X 100
(Gross Profit / Cost ) X 100
IS YOUR LACK OF UNDERSTANDING M ARGIN VS. M ARKUP AFFECTING YOUR PROFITABILITY? SPEAK W ITH A CLB FINANCIAL EXPERT