The Difference Between Markup & Margin

The Difference Between Markup & Margin

Today, I’m going to touch on some accounting principals, markup and margin. These are two terms that you may have to think about when you’re calculating profit and pricing in your business. These are numbers that you should be familiar with and how they play into your business because they can help with your profitability.

Markup and margin are not the same, even if occasionally you may hear them used in the same way.

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Markup is Dead

Markup is Dead

Let's go back to a time pre-internet.  Cue the fog and crackly old-time radio.  Generally, the wealthy were the only ones who could afford to hire a decorator.  HGTV didn't exist.  Correspondence was done via letter or the phone.  Orders were placed with checks.  Cell phones didn't exist or were giant bricks kept in the car "for emergencies".  Shopping was all done in-store or from a mail-order catalog, you had to literally mail-in or call in your order.  Things that couldn't be sourced would be designed and custom made in a workroom.  Clients had no access to trade-only sources.  

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Designers, Show Your Clients What You Paid

Designers, Show Your Clients What You Paid

One of the ways that I practice radical transparency is by displaying my purchase cost on the client invoice.   This separates the cost of the item from the design fees or markup.   By doing this you are clear about the cost of the item and your design fees.  I don’t think that lumping them together is good for business anymore. This practice is common, but I think it is becoming harder and harder for the lump-sum designers because clients are checking prices and are savvier than they ever have been. I recently read a post on a Facebook about a designer that had a client that was purchasing fine art. The designer had spent dozens of hours searching for the right pieces

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