Bill has the big education and the big job in the big city. Whereas, brother Bob owns “just a” bait shop in their hometown yet appears to be making a pretty decent living. Can that be?
After years Bill finally asks brother Bob to share his secret for success. Bob, pleasantly surprised by his brothers’ question says:
“It’s really quite simple. I buy a dozen minnows for a buck and sell ‘em for three bucks – you’d be surprised what that 2% will get you”.
It’s clear that brother Bob doesn’t know, or at least pretends not to know, the precise margin of profit he makes from his simple mark-up. Do you?
Bill being good with numbers can see that Bob’s mark-up on the direct cost of the minnows was actually ____ % and the gross profit margin was _____%.
Although Bob may not, or pretends to not, know his precise mark-up and margin, he does know he needs to mark-up his direct costs by a handsome margin in order to make a decent profit and living.
The percentage of mark-up must always be greater than the desired resulting margin (e.g., 10% markup does not equal 10% margin, 20% markup does not equal 20% margin).
The Magic Pill © provides easy to follow illustrations, samples, charts and tables on pricing including the difference between mark-up and margin and profitability.
But wait there is even more … a few chapters later Bill meets Tom and learns why successful business people know all their stats inside and out with particular attention on the two most vital stats of all.
I invite you to post any comments regarding the above including your calculation of the mark-up and margin. Please email firstname.lastname@example.org for information on how you can obtain your very own autographed copy of The Magic Pill ©.
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