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In car business - and especially in automotive services - markup is a common method for making money. But how do margin and markup differ, what options are available, and how can you manage it with Drivly?
  • Markup is generally known as the amount an automotive business adds to the cost of a product or service to make up the final selling price so they can make money.
  • Margin is generally known as the profit generated after accounting for costs.
Markup is shown as a percentage of costs while margin is shown as a percentage of revenue. These two terms usually get confused as they both have similar inputs: what the service sold for and the cost of the service.

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Ordering Transportation

Let’s look at an example to help clarify:
Nathan, who is a developer, integrates Drivly’s Transport API into is his automotive retail business. A customer lands on his site and orders a transport for a 2020 Audi A4 from Miami, FL 33132 (pick up location) to Austin, TX 78701 (delivery location).

Nathan offers the transport service for $1,050 and it costs the transport provider $850 – so the difference is $200.
  • Margin would be calculated as $200/$1,050 = 19.05%
  • Markup would be calculated as $200/$800 = 23.53%
Below is a visualization of the transaction flow:
Hero Dark

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Ordering Vehicle Protection

Sometimes it can get confusing, so let’s look at another example for Drivly’s F&I products (they are amazing):
Nathan, who is a developer, integrates Drivly’s VSC API into is his automotive retail business. A customer lands on his site and orders a transport for a 2020 Audi A4 from Miami, FL 33132 (pick up location) to Austin, TX 78701 (delivery location).

Nathan offers the transport service for $1,050 and it costs the transport provider $850 – so the difference is $200.
  • Margin would be calculated as $200/$1,050 = 19.05%
  • Markup would be calculated as $200/$800 = 23.53%
Below is a visualization of the transaction flow:
Hero Dark

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Can I charge my customers a markup?

Yes! Drivly automatically adds margin into the APIs so you can add a markup. You can choose to add a markup to any of Drivly’s services such as transportation, inspections, F&I products and more. It’s a common in car business to add a markup to cover your operating costs and make a profit, always keep the customer in-mind.

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How much can I mark up?

If you’re using Drivly’s API Commerce Platform, adding a markup is completely in your control. You have the flexibility to choose markup based on your own pricing strategy and your customer base. For example, you could add 10% on long haul transportation from Florida to California if that’s your most popular region or 15% on VSC products if most of your customers buy F&I products with their purchase, it’s completely up to you! Drivly handles the heavy lifting and let’s you focus on your customers.

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How do I add markup?

Can my customer see the markup?
How do I add markup so the customer only sees one price?
If you’re integrating Drivly API’s into your own app or website, you have control over exactly what the customer sees, so you can choose to show them whatever price you want. That could be the price that Drivly is charging you, more, or less. Remember, some customers are more price sensitive than others…[add more]

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How do I know the amount to charge my customers?

To calculate the amount you need to charge your customer is completely up to you. In car business, here are some general rules of thumb:
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On average how much do automotive businesses markup services?

Unfortunately, there isn’t a one-size-fits-all when it comes to markup as it varies based on a multitude of factors. Here are a few examples:
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You can learn more ways on how AI is transforming the automitive industry by reading our new book: “The AI revolution of Car Business”