Calculating the margin is one of the basic skills of any salesperson. Selling at a good price ultimately means making a good profit. That is why you need to learn how to correctly calculate the trading margin before you plunge into trading with your head.
Instructions
Step 1
The margin is one of the structural elements of the price. Its economic meaning is quite simple: with an average volume of sales, the value of the trade margin should be enough to cover all the seller's costs and receive a certain profit. In different sectors of the economy, as well as at different levels of the chain from producer to consumer, there are different margins due to the specifics of each type of business. Even the sale of the same product at different stages of its movement is subject to different margins. The simplest example of this is the wholesale and retail trade of food products. According to the established practice, the wholesale mark-up on products in the general case is 10%, and for a retail buyer in a store it is already about 25%.
Step 2
In practice, the trading margin can be calculated in at least two ways: in absolute and relative terms. To calculate the trade markup in absolute terms, define the markup using the formula: "sales price minus purchase price". Thus, knowing both values, you can easily get the amount of the trade margin.
Step 3
In relative terms, the trade margin should be calculated using a different formula: "the selling price divided by the purchase price, minus one". The resulting number should be converted to percentages. This formula is applicable to any trade and is partially applicable to determine the margins in production, if the purchase amount is understood as the raw material cost of the final product.
