Follow up to markup question....

[emahler]

Say you decide to use the $10 price, regardless if you bought it for $8 or $10. And you want 30% profit for that material....

Would you:

a) take the $10 and multiply by 30% (ie. 10x1.30=$13.00)

or

b) take the $10 and divide by 0.7 (ie 10/0.7=$14.29)

Which one and why?

 

[electricguy]

divide by .7 of coarse
Because if you take the 30 percent back off you end up with the price that you would of purchased it for.

I posted this in another forum about 2.5 years ago

Margin
The divisors are as follows
divide by .9=10 percent margin
divide by .8=20 percent margin
divide by .7=30 percent margin
divide by .6=40 percent margin

this was helpful as if you took 10 percent off your selling price you would not lose
but if you took 40 percent off you were selling at less than your cost

IE, marked up item that cost 100.00 + 40 percent margin= $166.00

100.00 + 40 percent =140.00
140.00-40 percent =84.00

but 166.00-40 percent=96.60
still less but more workable

I usually try and charge a 35 percent margin and get complained about that on material that are about 1000.00 material bill

oh well hopefully i can just charge properly one day and not have to explain to the customer why i mark up

 

[Dennis Alwon]

Say you decide to use the $10 price, regardless if you bought it for $8 or $10. And you want 30% profit for that material....

Would you:

a) take the $10 and multiply by 30% (ie. 10x1.30=$13.00)
or

b) take the $10 and divide by 0.7 (ie 10/0.7=$14.29)

Which one and why?

If you want to make 30% then you take $10 and multiply by 1.3 = $13.00
That's a 30 % markup.

 

[emahler]

If you want to make 30% then you take $10 and multiply by 1.3 = $13.00
That's a 30 % markup.

but i want a 30% profit

 

[Dennis Alwon]

but i want a 30% profit

That is 30 % profit. 30% of $10 is $3.00 add that to the $10 and get 13.00

 

[Dennis Alwon]

Think of it like this --- A 30% discount is $3.00 off. $10.00- $3.00= $7.00.

$7.00 is what you would pay. If you mark the $10 up 30% you are indeed marking up the product 130%. You paid 100% for the product and you get 30% profit. Now if you are dealing with tax I usually mark it up 30% + tax (7%). 37%--- That's what I would do.

 

[Dennis Alwon]

divide by .7 of coarse
Because if you take the 30 percent back off you end up with the price that you would of purchased it for.

What you are saying is a 30% discount on an item that cost 14.29. That is not the same as a 30% markup of $10.00.

 

[electricguy]

Yes Thats what i am saying

if you want to give a customer a 10 percent or20 or 30 percent off you will loose if you take 30 percent off of 13.00 you would be selling for less than what you piad.

 

[Dennis Alwon]

Yes Thats what i am saying

if you want to give a customer a 10 percent or20 or 30 percent off you will loose if you take 30 percent off of 13.00 you would be selling for less than what you piad.

You are misunderstanding what I am saying. A 30% markup on $10 is not $14.29 it is $13.00.

 

[emahler]

You are misunderstanding what I am saying. A 30% markup on $10 is not $14.29 it is $13.00.

right, but markup and margin (profit) are not the same.

If I sell something for $13, 30% of $13 is $3.90
now $13-$3.90=$9.10

If I buy it for $10 and sell it for $13, I have only made 23% profit, not 30%

i guess the caveat is that I want 30% profit on my sale price, not my purchase price.

 

[Dennis Alwon]

i guess the caveat is that I want 30% profit on my sale price, not my purchase price.

This makes no sense--- how are you determining the sale price? Then you mark that up.-----I don't get it but you can do what you want I would not call it a 30% markup because it is misleading. 30% markup is what I have stated in the earlier post. I have never seen it done your way.

 

[electricguy]

You are misunderstanding what I am saying. A 30% markup on $10 is not $14.29 it is $13.00.

yes thats a 30 percent mark up
but its not a 30 percent margin mark up

 

[LarryFine]

:roll: !

 

[Dennis Alwon]

yes thats a 30 percent mark up
but its not a 30 percent margin mark up

Now you got it. Check out this site

http://www.buildingtrade.org.uk/articles/markup_or_margin.html#selling-price-from-cost-price

 

[electricguy]

Thanks Dennis that should answer Larry's question

 

[LarryFine]

Thanks Dennis that should answer Larry's question

Question? :-?

 

[electricguy]

Question? :-?

I didnt quite understand what your single smiley meant in your previous post

 

[LarryFine]

I didnt quite understand what your single smiley meant in your previous post

Oy gevault!

 

[growler]

If you want to make 30% then you take $10 and multiply by 1.3 = $13.00
That's a 30 % markup.

I like to use "0" mark up. Whatever I pay for an item I just add a zero. $1=$10, $10=$100 and so on. When asked " what's your mark-up" , I can answer zero.

I learned this from watching the " The Three Stooges" as a child. When asked how much horse meat was in the rabbit stew the answer was 50%.
Equal amounts ( one horse, one rabbit ).

 

[mdshunk]

With these flat markup percents, it does not take into account one certain reality. There is a defined, fixed cost involved in procuring an item, whether it cost 1 dollar or 1,000 dollars. Because of this, I choose to use a sliding scale markup.