Mark-up % = Profit ÷ Cost × 100. Here, profit is $80, cost is $160. So, (80 ÷ 160) × 100 = 50%. This differs from margin, which is profit ÷ selling price. Mark-up analysis helps buyers understand supplier pricing structures, detect hidden margins, and strengthen negotiation. By knowing whether a supplier is working with high or low mark-up levels, buyers can challenge prices more effectively or justify alternative offers. This analytical preparation supports objective negotiation rather than reliance on supplier claims.
[Reference: CIPS L4M5 (2nd ed.), LO 2.2 – Understanding costing (mark-up vs margin) in negotiation prep., , , ]
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