Understand markup versus margin before quoting a price
Markup and margin use different denominators. Confusing them can make a price look more profitable than it is, especially when teams calculate quotes quickly from supplier costs.
Write the formula beside the quote
Markup is profit divided by cost, while margin is profit divided by selling price, using the same cost definition. Include delivery and other relevant costs before calculating. Confirm whether taxes and pass-through items are included in internal reports so teams compare like with like.
A worked example
If illustrative cost is ₹800 and selling price is ₹1,000, the difference is ₹200. Markup is 25% of cost, while margin is 20% of selling price. Neither figure includes omitted overhead.
Illustrative scenario; this is not a claim about an actual Conxn client or guaranteed results.
Your action checklist
- Label the denominator clearly
- Use a shared quote calculator
- Recheck costs when supplier terms change
Can a markup target replace margin reporting?
It can support quoting, but review the resulting margin and total contribution. A familiar markup does not guarantee the business covers all costs.
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