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faq:price_code_calculations_how_does_the_markup_calculation_work_margin_retail_tab [2011/09/01 14:22 (13 years ago)] tanyafaq: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 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.
  
  
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-==== Explenation ====+==== 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. 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 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. Please look at our price code X for this type of calculation.+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.
  
  
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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 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.  
 + 
  
  
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 ==== Calculation ==== ==== Calculation ====
 <code> <code>
-Gross Margin Percentage = (Revenue - COGS)-Revenue*100%+Gross margin = (Revenue - Cost of goods soldRevenue
 </code> </code>
 +
 +
 +
 +
  
  
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 <code> <code>
-retail cost /(margin percentage)+Gross margin = (Revenue - Cost of goods sold/ Revenue
  
-100 / (50%) +200-100/200 = .50
-100 / (.5) +
-200+
 </code> </code>
 +
 +
  
 ===== Example 2 ===== ===== Example 2 =====
   * Where COST = 100   * Where COST = 100
-  * Where Margin Percentage = 40+  * Where Margin Percentage = 60
  
 <code> <code>
-retail cost /(margin percentage)+Gross margin = (Revenue - Cost of goods sold/ Revenue 
 + 
 +250-100 / 250 = .60
  
-100 / (40%) 
-100 / (.4) 
-250 
 </code> </code>
  
  
faq/price_code_calculations_how_does_the_markup_calculation_work_margin_retail_tab.1314912153.txt.gz · Last modified: 2011/09/01 14:22 (13 years ago) by tanya