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Subject:Agency margins: markup defined From:"Wilcox, John (Contractor)" <wilcoxj -at- WDNI -dot- COM> Date:Mon, 19 May 1997 10:05:00 -0700
I wrote:
> It seems there is some confusion here about the term markup. If the
> consultant is getting half of what the agency charges, that isn't a 50%
> markup -- it's 100%. If the agency charges, say, $45.00 per hour, and
> the consultant gets $30.00 of that, that's a 50% markup.
Buck wrote:
It's possible that some confusion does exist because we didn't specify
how it's figured.
Markup in most businesses is figured on selling price, but I don't
really know how an agency does it. In my view a 50% markup on the
selling price is
BILLING RATE TO EMPLOYER: $80
PAY TO EMPLOYEE: $40
I respond:
Seems this is a good case of a need for applying some basic technical
communication principles. If we're going to communicate effectively,
we'll need to find the correct term and agree on its definition. The
standard use of the term "markup" as given in any textbook on
introductory economics is thus: if you buy something for X and sell it
for Y, your markup is (Y-X)/X. So, if an agency buys my services for,
say, $30.00/hr, and if they sell those services to a client for, say,
$43.50/hr, then their markup is 45%.
Regards,
John Wilcox, Documentation Specialist
Timberlands Information Services
Weyerhaeuser, WWC 2E2
Tacoma, WA 98477-0001
253-924-7972 wilcoxj -at- wdni -dot- com
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