Added value plays a key role in pricing where H is the markup, GP is the gross profit, C is the cost of goods sold. Gross profit is calculated by subtracting the total cost of production from the actual or planned sales volume.
Using this formula, you can calculate both th phone number list e general markup for all goods and for individual product categories.
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What influences the amount of trade margin?
Example : In April, the bread factory website promotion on your own s revenue was 133 thousand rubles. The cost of goods sold for that month was 47 thousand rubles.
Let’s calculate the markup using the formula: ((133,000 – 47,000) / 47,000) × 100% = 183%.
The bakery’s markup in our example is 183%.
For such calculations, it is recommended to take a period of one or two quarters or even a year, since calculating the retail markup on a product separately for each month does not make sense.
Compare the data obtained. If they differ by more than 20%, calculate the markup based on the annual sales volume. If the figure obtained is less than 20%, use the sales volume of the last month as a basis and maintain this markup for 6 months. After that, the added value can be adjusted using the formula above.
The influence of markup on price formation
. Let’s take the example of a sports store that sells not only balls, but also other products with different prices and costs. Without knowing the markup, the business will not be able to accurately determine how much money it makes on each product and which items are more profitable for it to sell. The table shows information on the cost price, price and gross profit of various product groups. Although the markup is not indicated, based on this data, it can be concluded that sneakers bring the greatest profit.
It is not difficult to determine the trade margin based on the table data. Calculations show that the store earns the most not only on sneakers, but also on expanders. Both items have the same markup. At the same time, the gross profit from selling sneakers is twice as high as from selling expanders. The least profit comes from selling tennis rackets. At the same time, the gross profit from their sale is the same as from expanders. The trade margin allows malaysia numbers list you to determine which products provide the highest profit.
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Using the data in the table form, we can figure out how to calculate the markup size for each product item:
- ball – 30%;
- tennis racket – 17%;
- fins – 43%;
- sneakers – 67%;
- expander – 67%.
Without knowing the amount of added value, it is impossible to understand the full benefit of selling