Margin is defined as profit expressed as a percentage of the selling price, not the cost. This is a critical distinction from mark-up, which expresses profit as a percentage of cost. For example, a 20% margin means that 20% of the price charged to the buyer represents profit, while 80% represents cost. CIPS emphasises that buyers must clearly understand this difference to avoid being misled during pricing discussions. Confusing margin with mark-up can significantly weaken negotiation effectiveness.
[Reference: CIPS L4M5 Commercial Negotiation (CORE), 2nd edition – LO 2.2: Pricing structures, margin vs mark-up in negotiation preparation., , ]
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