What is the difference between gross and net advertising rates?
Answer Oh great a simple question! Thank you. Media providers – magazine, newspaper, television, outdoor, radio, internet, etc will charge an ad agency their prescribed rate either as a gross or net amount. Agencies have typically made their income based on a commission from the sale of the media. This commission varies but typically it is calculated as a mark up 17.65% or 15% margin. By the way people often confuse margin with markup. People believe if you mark things up 7% you have a 7% margin. Nothing could be further from the truth and a reason people get into financial trouble. Take one hundred dollars and apply a 30% markup. You get $100 x 30% = $130.00 – correct? It is but the margin is calculated on the whole. If we take the $100 and divide by .70 we end up with $142.85 and in this a 30% margin. The $42.85 is 30% of the whole $142.85. If you gave up that $12.85 enough times on a million dollars of media sales you would lose $128,500. i only tell you this because of maybe what y
