Myth of Profit Margins

For me, dopeness is what I like the most. People who wanna make things as dope as possible. And by default, make money from it. The thing that I like the least, are people who only wanna make money from things whether they’re dope or not, and especially make money from making things [the] least dope as possible.” -Kanye West, 2014

 4. Profit margin and markup are the same. They are not. Profit margin is profit as a percentage of revenue. Profit percentage (or markup) is profit as a percentage of cost (the percentage difference between your cost and the selling price). Another metric is cash margin, which is not expressed in a percentage.” – Andrew Miller, President, ACM Consulting Inc.

I picked number four because most people including myself think/thought they are the same.

Got an iPhone?

gross profit divided by total revenue

See article on Startup Master

Got Facebook?

That’s Mark up (profit percentage)!

Most of the Internet believes that profit margin is the made for/retail formula.

It’s not.

Profit Margin is the percentage iPods profit/sold in comparison to total revenue (gross/net) Apple makes.

Here’s a graph

Apple Inc – Gross Profit Margins – Courtesy of Asymco

Now you know.

Watch out for another post on Pricing Strategy in the next couple of days.

The link(s) for Profit Margins below:

Markup Myths


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s