SEARCH HOME
Math CentralQuandaries & Queries

search

Question from Deanna:

What is the difference between a margin percent and a point margin? For instance. A co-worker sells product. If the wholesale cost of said product is $.20, she multiplies that by 1.7 to get her selling price of $.34. To me, that is a 70% margin on the product (our company is making 70% on top of the purchased price). She considers it a 30 point margin, but to me it is 70%. Does that make sense? Any help? What is the difference between a point margin and a percentage?

Deanna,

If her wholesale cost is $0.20 and her selling price is $0.34 then her markup in dollars is $0.34 - $0.20 = $0.14. There are two common ways to express the markup in dollars as a percentage.

Markup as a percentage of the cost: (Markup)

($0.14/$0.20) × 100 = 70%. Thus he markup is 70%.

Markup as a percentage of the selling price: (Margin)

($0.14/$0.34) × 100 = 41%. Thus he margin is 41%.

I am unaware of the use of the term point margin in this context.

Harley

About Math Central
 

 


Math Central is supported by the University of Regina and The Pacific Institute for the Mathematical Sciences.
Quandaries & Queries page Home page University of Regina PIMS