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--- faq:price_code_calculations_how_does_the_markup_calculation_work_margin_retail_tab [2011/03/04 16:25 (13 years ago)] – cliff
+++ faq:price_code_calculations_how_does_the_markup_calculation_work_margin_retail_tab [2011/09/01 14:37 (13 years ago)] (current) – tanya
@@ Line 1: / Line 1: @@
 ====== How do the calculations on the retail tab work ======
 ===== Markup Calculations =====
-A markup calculation is a calculation that does its math from "the bottom up". This means that is takes the cost and adds the markup. The 2 codes that use the markup calculation style are W and L. The cost used is different for each one. W uses base cost, and L uses actual costs otherwize known as the landed cost.
+A markup calculation is a calculation that does its math from "the bottom up". This means that it refers to the dollar value increase as a percentage of cost. The 2 codes that use the markup calculation style are W and L. The cost used is different for each one. W uses base cost, and L uses actual costs otherwise known as the landed cost.
 ==== Calculation ====
 <code>
 COST + (COST x (Percentage))
 </code>
 ==== Example 1 ====
-Where COST = 100
+  * Where COST = 100
-Where Markup Percentage = 100
+  * Where Markup Percentage = 100
 <code>
@@ Line 18: / Line 22: @@
 </code>
 ==== Example 2 ====
-Where COST = 100
+  * Where COST = 100
-Where Markup Percentage = 150
+  * Where Markup Percentage = 150
 <code>
@@ Line 35: / Line 40: @@
-==== Explenation ====
-The 100% markup scenario is a great example because most retailers know that a 100% markup is double the price. A common mistake in the calculation can happen if you are used to thinking about things in terms of percentage of cost. if I have a cost of $100 and a price of $300 it is intuative to say that the price is cost x 300%. The problem with that is that the markup is only 200%. Test it using the formula above.
+==== Explanation ====
+The 100% markup scenario is a great example because most retailers know that a 100% markup is double the price. You can think of the calculation of markup as a way to compare the cost to the increase in terms of a percentage.
+A common mistake in the calculation can happen if you are used to thinking about things in terms of percentage of cost. if I have a cost of $100 and a price of $300 it is intuitive to say that the price is cost x 300%. The problem with that is that the markup is only 200%. Test it using the formula above. Please look at our price code X for this type of calculation.
 ===== Margin Calculations =====
-A markup calculation is a calculation that does its math from “the bottom up”. This means that is takes the cost and adds the markup. The 2 codes that use the markup calculation style are W and L. The cost used is different for each one. W uses base cost, and L uses actual costs otherwize known as the landed cost.
+A margin calculation is a calculation that does its math from “the top down”. This means that it refers to the dollar value increase as a percentage of retail. The 2 codes that use the margin calculation style are H and M. The cost used is different for each one. H uses base cost, and M uses actual costs otherwise known as the landed cost.
+==== Calculation ====
+<code>
+Gross margin = (Revenue - Cost of goods sold) / Revenue
+</code>
+===== Example 1 =====
+  * Where COST = 100
+  * Where Margin Percentage = 50
+<code>
+Gross margin = (Revenue - Cost of goods sold) / Revenue
+-100/200 = .50
+</code>
+===== Example 2 =====
+  * Where COST = 100
+  * Where Margin Percentage = 60
+<code>
+Gross margin = (Revenue - Cost of goods sold) / Revenue
+-100 / 250 = .60
+</code>