What is Net Margin and Markup in Dealavo?

When calculating net margin, there are some standard rules in the Dealavo app that you should understand in order to get the data in the app correct.

In this article, we will discuss what data you need to provide in the product feed to correctly set limits in Repricing, and explain the basic differences between margin and mark-up.

Margin and mark-up – the difference

Both margin and markup tell you how much a company earns on a product. They are usually expressed as percentages (we then speak of percentage margin or percentage markup).

The difference between margin and markup lies in the reference value used in the calculation:

Margin is based on the selling price.

Markup is based on the unit cost (in the case of a manufacturer) or the purchase price (in the case of a store).

Gross versus net: what do you need to know?

In the Dealavo application, both the selling price and the purchase price should be entered as gross values, meaning they include VAT. This ensures consistency in calculations and correct interpretation of results.

Some users are confused by the term “net margin” when the application works with gross values. This is because the formula uses gross values in both the numerator (gross profit) and the denominator (gross selling price). As a result, the net margin calculated with gross prices gives the same result as if calculated entirely with net prices — the VAT effectively cancels out.

Failure to follow this standard can lead to incorrect margin results, as the VAT inclusion will not be consistent. To avoid errors, make sure both the selling price and purchase price are provided as gross values.

Margin vs. Markup – quick reminder

Although often used interchangeably, margin and mark-up differ in how they are calculated:

Margin = (Selling Price - Purchase Price) / Selling Price × 100%

Markup = (Selling Price - Purchase Price) / Purchase Price × 100%

So:

Margin tells you what percentage of the selling price is profit.

Markup tells you what percentage of the purchase price has been added as profit.

Understanding this distinction is essential when setting limits in Dealavo's repricing module.