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 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

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