Click here to ask for a free demo
As a GEM-CAR customer, you have access to GEM-UNIVERSITY with all recorded GEMINAR including the one on how calculate selling price based on a cost using a margin. You would also have access to the industry standard margin based of different categories .
-
What is the growth margin
The gross margin is the profit calculated on the selling price of an article.
For example, for a repair shop :
- with 1 million in sales,
- with a $100 000 in profit,
We would all say that he as a 10% gross margin!
| Margin Formula for a shop : Profit / Sales |
OR
| Margin Formula for a product: (Selling-Cost) / Selling |
To calculate the selling price based on the cost with a margin in % ;
| Selling price = Cost / (1-Margin) |
Ex:
If an item as a cost of $100 with a margin of 40%, we should sell it for $166.67
Selling = 100 / (1 - 0.4) = $166.67
Margin = (166.67-100) / 166.67 = 40%
At the end of the day using a margin vs a markup makes more money in your bank account.
Ex : a part at $100 sold for $100 x 140% = $140
Margin = ($140-$100) / $140 = 29%
At the end of the day using a margin vs a markup makes more money in your bank account.
Ex : a part at $100 sold for $100 x 140% = $140
Margin = ($140-$100) / $140 = 29%
To calculate the selling price based on the cost with a markup ;
| Selling price = Cost * (1 + markup) |
Ex:
If an item as a cost of $100 with a markup of 40%, we should sell it for $140
Selling = 100 x (1 + 0.4) = $140
