ActionAtlas allows businesses to track profitability using either a flat markup rate or by margin percentage. Project managers can switch between these two methods to analyze project profitability from different perspectives.
Understanding Margin vs. Markup
Before changing between margin and markup, it's important to understand the difference:
- Markup is calculated as a percentage of cost. For example, a 20% markup on a $100 cost results in a $120 price (adding $20 to the cost).
- Margin is calculated as a percentage of the selling price. For example, a 20% margin on a $125 price means $25 is profit (20% of the price).
Note: Switching between margin and markup will recalculate your project's profitability using the new method, but doesn't change the underlying costs or contracted amounts.
Changing Between Margin and Markup
Step 1: Navigate to a Project
Open the project where you want to change the profitability calculation method.
Step 2: Click on the Financial Tab
Select the "Financial" tab from the project navigation menu.
Step 3: Select "Edit"
Click the "Edit" button in the upper right corner of the financial overview page.
Step 4: Change the Profitability Method
On the right side of the financial overview page, locate the dropdown selector labeled "Profitability Method" or "Calculation Type".
Click the dropdown and select either "Margin" or "Markup" as desired.
Step 5: Save Your Changes
Click the "Save" button to apply and retain your changes.
The system will immediately recalculate all financials using the selected method.
Impact of Changing the Calculation Method
When you switch between margin and markup, you'll notice several changes in your financial reporting:
- The profitability percentages will be different for the same financial data
- The Quick Report section will update to reflect the new calculation method
- Line-item profitability will be recalculated across all expense categories
- Reports generated afterward will use the selected method
Important: Be consistent in your approach when comparing projects. Comparing one project using margin to another using markup can lead to misleading conclusions about relative profitability.
Need Help?
Our support team is available to assist with financial calculation questions.
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