“If you don’t know the difference between margin and mark-up,” says Daniel Truffini, “Your revenue might be taking a hit. Don’t let anyone tell your otherwise, it’s all about the margin at the end of the day.” Trufinni makes the cost compared to. value distinction and offers three formulas to help animal health pros calculate them.
Source: Today’s Veterinary Business, February/March 2018.
Here’s something that surprises people: The higher the mark-up, the lower the margin. The key difference between these two approaches to pricing items is that “margin” is based on the selling price while “markup” is based on the cost of merchandise.
INSIGHTS: A fourth formula commonly used in our industry is: (Selling Price – Cost) ÷ Selling Price = Profit Margin.