GEM-CAR FAQ
How to Calculate Gross Margin - Selling Price Based on a Cost
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 ou 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
Other articles on the subject:
What Profit Margin Should I Expect on Parts Sales
How Do You Calculate a Profit Margin
Price Calculation Based on the Progressive Price Matrix
Modify the Margin Metric for Your Parts
How Can I Create a Warranty Invoice without Affecting Sales Margin Reports
Posted 1 month agoby Bianca da Silveira De Amorim
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