What is the difference between mark-up and margin?

When distributors talk about marking up an item 20% , do they mean 20% profit margin or markup percentage?

  • For example...I am a distributor and I buy an item for $1.00......should I sell it for $1.20 (which is 20% markup) or should I sell it for $1.25 which is a 20% profit margin... What is a general rule of thumb for marking up candy products? What type of markup percentage? What type of profit margin? I know its general, but any help is appreciated.

  • Answer:

    Most people don't understand the difference. You should sell it at $1.25 The standard markup in retail is 40%. That means divide the cost by .6 to arrive at the retail price.

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