The calculation of the markup is necessary for the correct pricing of individual groups of goods and for calculating the prices at which competitors are purchased. That is why every entrepreneur should know how to calculate the margin.
Instructions
Step 1
Please note that mathematically, a markup implies a percentage (in rare cases - a firm) markup in relation to the purchase price of a product. In turn, the margin added to the value of the purchase cost forms the final selling price of the goods. The consumer pays for it. With a sufficient volume of committed sales, the amount of the margin should be enough for the company not only to cover all the associated costs of production activities, but also to make a profit.
Step 2
Conduct pricing analysis. Regardless of the prices at which you purchase goods from suppliers, the final price should, first of all, suit buyers. That is why there are no clear mark-up coefficients in pricing, and the mark-up for each type of product will vary in accordance with many conditions.
Step 3
Calculate the selling price of the item. To do this, multiply the purchase cost by the corresponding percentage of the markup (each type of product has its own percentage). Add the resulting value to the purchase amount.
Step 4
Calculate competitive purchase prices. For these purposes, select a product category to compare. After that, add a unit to the average markup for this type of product, and then divide the selling price of the competing company by the amount received. By comparing several separate headings in this way, you can gain a general understanding of competitive purchasing prices.
Step 5
In turn, the economic meaning of the margin is quite simple: with an average sales volume, the size of the trade margin should be enough to cover all the seller's costs and to receive some definite profit. It should be borne in mind that the sale of one product at different stages of its movement is subject to different margins.
