Is Your Local Small Business Missing Its Margin Goal?
Episode 246 – The Local Small Business Coach Podcast
Markup vs Margin
Markup vs Margin – Why Your Local Small Business Might Be Missing Your Margin Goal
When making pricing decisions for your products or services, do you tend to assign a dollar amount to the costs to determine how much you plan to mark them up or do you have a certain percentage that you use?
A big mistake that some business owners make is they price purely off a dollar markup they want. However, the important thing is knowing your margin % and how much you make on each product or service. After all, your profit and loss statement is based off percent of sales. As you know, your costs are seen as a percent of sales, so should your profit.
Let’s take a deeper dive into how you might be confusing markup and margin and costing yourself profits!
Calculations Found in the Episode:
Markup %: Profit divided by Costs
Margin %: Profit divided by Sales
QUOTE OF THE WEEK: “I like businesses with great margin” – Warren Buffet
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