faq:price_code_calculations_how_does_the_markup_calculation_work_margin_retail_tab
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faq:price_code_calculations_how_does_the_markup_calculation_work_margin_retail_tab [2011/03/04 16:43 (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 | ||
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===== Markup Calculations ===== | ===== Markup Calculations ===== | ||
- | 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 otherwize | + | 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 |
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- | ==== Explenation ==== | ||
- | The 100% markup scenario is a great example because most retailers know that a 100% markup is double the price. The markup term refers to the increase in price not the percentage in relation to 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 | + | ==== 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. | ||
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+ | 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 | ||
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===== Margin Calculations ===== | ===== Margin Calculations ===== | ||
- | 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 otherwize | + | 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 |
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==== Calculation ==== | ==== Calculation ==== | ||
< | < | ||
- | retail | + | Gross margin |
</ | </ | ||
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< | < | ||
- | retail | + | Gross margin |
- | 100 / (50%) | + | 200-100/200 = .50 |
- | 100 / (.5) | + | |
- | 200 | + | |
</ | </ | ||
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===== Example 2 ===== | ===== Example 2 ===== | ||
* Where COST = 100 | * Where COST = 100 | ||
- | * Where Margin Percentage = 40 | + | * Where Margin Percentage = 60 |
< | < | ||
- | retail | + | Gross margin |
+ | |||
+ | 250-100 / 250 = .60 | ||
- | 100 / (40%) | ||
- | 100 / (.4) | ||
- | 250 | ||
</ | </ | ||
faq/price_code_calculations_how_does_the_markup_calculation_work_margin_retail_tab.1299285793.txt.gz · Last modified: 2011/03/04 16:43 (13 years ago) by cliff