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Posted: 7/25/2013 12:12:28 PM EDT
[#1]
.20 |
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Posted: 7/25/2013 12:13:08 PM EDT
[#2]
87 cents
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Posted: 7/25/2013 12:13:18 PM EDT
[#3]
Quote HistoryQuoted:
.20 Math fail. Marking up would be adding 20%, so $1.20. |
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Posted: 7/25/2013 12:14:37 PM EDT
[#4]
$1.25
The traditional way to calculate profit margin is as a percentage of the retail price. Margin = Net Profit / Revenue. .20 = .25 / 1.25 Some businesses will just mark up 20% from the wholesale cost (giving you $1.20), but that's not the correct way to do it, at least according to traditional accounting/marketing terms. |
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Posted: 7/25/2013 12:14:38 PM EDT
[#5]
Quote HistoryQuoted:
.20 So you have a $1000 gun you will sell to me for $200... What a swell guy. |
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Posted: 7/25/2013 12:15:00 PM EDT
[#6]
Quote HistoryQuoted: Math fail. Marking up would be adding 20%, so $1.20. Quote HistoryQuoted: Quoted: .20 Math fail. Marking up would be adding 20%, so $1.20. I'm sure thats what he meant. It's a .20 markup over $1.00 |
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Posted: 7/25/2013 12:15:04 PM EDT
[#7]
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Posted: 7/25/2013 12:15:35 PM EDT
[#8]
Quote HistoryQuoted:
$1.25 The traditional way to calculate profit margin is as a percentage of the retail price. Margin = Net Profit / Revenue. Some businesses will just mark up 20% from the wholesale cost (giving you $1.20), but that's not the correct way to do it. Winner!!! |
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Posted: 7/25/2013 12:16:50 PM EDT
[#9]
Quote HistoryQuoted:
Math fail. Marking up would be adding 20%, so $1.20. Quote HistoryQuoted:
Quoted:
.20 Math fail. Marking up would be adding 20%, so $1.20. I know the math. He said I "have" the dollar and want to make 20%. If I collect .20 I have made 20% on what I have. I'm guessing it is/was some kind of trick question? |
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Posted: 7/25/2013 12:17:32 PM EDT
[#10]
Quoted:
So you have $1.00 and want to mark it up 20% how much would you charge the customer? $1.00 / .8 = $1.25 selling price This gives you a 20% profit margin. |
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Posted: 7/25/2013 12:17:42 PM EDT
[#11]
LOL so helping with summer school are we
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Posted: 7/25/2013 12:17:57 PM EDT
[#12]
Quote HistoryQuoted:
So you have a $1000 gun you will sell to me for $200... What a swell guy. Quote HistoryQuoted:
Quoted:
.20 So you have a $1000 gun you will sell to me for $200... What a swell guy. I'll make up for it in volume 
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Posted: 7/25/2013 12:18:31 PM EDT
[#13]
There is a huge difference between markup and profit margin. For instance: $1.00 marked up 30 percent is $1.30. $1.00 with a 30% profit margin attached is $1.43. That is actually a 43% markup. Cost divided by profit margin is the formula you want if you trying to make a reasonable profit margin.
ETA: Typed that out too fast. Its cost/ reciprocal of profit margin. Ie: $100/.70=$1.43 giving you 30% profit margin. |
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Posted: 7/25/2013 12:19:14 PM EDT
[#14]
Quote HistoryQuoted:
I know the math. He said I "have" the dollar and want to make 20%. If I collect .20 I have made 20% on what I have. I'm guessing it is/was some kind of trick question? Quote HistoryQuoted:
Quoted:
Quoted:
.20 Math fail. Marking up would be adding 20%, so $1.20. I know the math. He said I "have" the dollar and want to make 20%. If I collect .20 I have made 20% on what I have. I'm guessing it is/was some kind of trick question? To make a 20% profit margin you would charge $1.25 Eta correct wording |
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Posted: 7/25/2013 12:22:17 PM EDT
[#15]
Quote HistoryQuoted:
LOL so helping with summer school are we No, teaching a new employee proper was of calculating profit |
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Posted: 7/25/2013 12:22:23 PM EDT
[#16]
Quote HistoryQuoted:
Eta correct wording hehe you're fast |
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Posted: 7/25/2013 12:23:26 PM EDT
[#17]
Quote HistoryQuoted:
There is a huge difference between markup and profit margin. For instance: $1.00 marked up 30 percent is $1.30. $1.00 with a 30% profit margin attached is $1.43. That is actually a 43% markup. Cost divided by profit margin is the formula you want if you trying to make a reasonable profit margin. You do not divide $1.00 by .3, you divide it by .7 to get your $1.43 with a 30% profit margin. $1.00 / .3 = $3.33 
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Posted: 7/25/2013 12:24:34 PM EDT
[#18]
Quote HistoryQuoted:
You do not divide $1.00 by .3, you divide it by .7 to get your $1.43. $1.00 / .3 = $3.33 Quote HistoryQuoted:
Quoted:
There is a huge difference between markup and profit margin. For instance: $1.00 marked up 30 percent is $1.30. $1.00 with a 30% profit margin attached is $1.43. That is actually a 43% markup. Cost divided by profit margin is the formula you want if you trying to make a reasonable profit margin. You do not divide $1.00 by .3, you divide it by .7 to get your $1.43. $1.00 / .3 = $3.33 Yeah. Caught it right after I hit submit. See edit. |
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Posted: 7/25/2013 12:32:00 PM EDT
[#19]
Marking up the cost of an item 100% gives you a 50% gross profit margin on SALES. It also gives you a gross 100 % return on investment.
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Posted: 7/25/2013 12:34:21 PM EDT
[#20]
Markup and margin are not the same.
Margin is the percentage of the selling price that is profit. Divide cost by 1 minus desired margin to get a selling price for said margin. 1/(1-.20) = $1.25 (sell for $1.25, make 20% - $0.25) |
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Posted: 7/25/2013 12:41:53 PM EDT
[#21]
Quote HistoryQuoted:
Markup and margin are not the same. Margin is the percentage of the selling price that is profit. Divide cost by 1 minus desired margin to get a selling price for said margin. 1/(1-.20) = $1.25 (sell for $1.25, make 20% - $0.25) Correct. I might have worded it wrong but you explained it correct. |
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Posted: 7/25/2013 12:42:02 PM EDT
[#22]
Quote HistoryQuoted:
$1.25 The traditional way to calculate profit margin is as a percentage of the retail price. Margin = Net Profit / Revenue. .20 = .25 / 1.25 Some businesses will just mark up 20% from the wholesale cost (giving you $1.20), but that's not the correct way to do it, at least according to traditional accounting/marketing terms. What you are clarifying is the difference between "mark-up" and "margin." |
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Posted: 7/25/2013 12:50:06 PM EDT
[#23]
Mark "IT" up = .25
Markup = .20 With a cost of 1.00 and a sales price of $1.25 |
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Posted: 7/25/2013 12:54:05 PM EDT
[#24]
Quote HistoryQuoted:
Mark "IT" up = .25 Markup = .20 With a cost of 1.00 and a sales price of $1.25 Is this a universal understanding of the terms mentioned? If so that's a simple way to word it. |
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Posted: 7/25/2013 1:04:31 PM EDT
[#25]
Quote HistoryQuoted:
Is this a universal understanding of the terms mentioned? If so that's a simple way to word it. Quote HistoryQuoted:
Quoted:
Mark "IT" up = .25 Markup = .20 With a cost of 1.00 and a sales price of $1.25 Is this a universal understanding of the terms mentioned? If so that's a simple way to word it. In my experience, no. Those who have taken business or accounting classes, and most people who have run/managed a business will know the distinction. But for the average person, the terms "profit margin", "marking it up", etc are all interchangeable for "markup", and most people will answer $1.20 to the OP. |
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Posted: 7/25/2013 1:20:53 PM EDT
[#26]
Quote HistoryQuoted:
I know the math. He said I "have" the dollar and want to make 20%. If I collect .20 I have made 20% on what I have. I'm guessing it is/was some kind of trick question? Quote HistoryQuoted:
Quoted:
Quoted:
.20 Math fail. Marking up would be adding 20%, so $1.20. I know the math. He said I "have" the dollar and want to make 20%. If I collect .20 I have made 20% on what I have. I'm guessing it is/was some kind of trick question? Not a trick question. It is the difference between the terms "markup" and "margin". If you collect .20 you have NOT made a 20% margin. You have to sell your dollar item for $1.25 to make a 20% profit margin. Margin is the percentage of the selling price that is profit and $.25 is 20% of $1.25. If you sell that same dollar item for $1.50 then you have made a 33-1/3% margin or if you can sell it for $2.00 you make a 50% margin because that $1.00 in profit is 50% of the $2.00 selling price. Posted Via AR15.Com Mobile |
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Posted: 7/25/2013 1:33:56 PM EDT
[#27]
Quote HistoryQuoted:
In my experience, no. Those who have taken business or accounting classes, and most people who have run/managed a business will know the distinction. But for the average person, the terms "profit margin", "marking it up", etc are all interchangeable for "markup", and most people will answer $1.20 to the OP. Quote HistoryQuoted:
Quoted:
Quoted:
Mark "IT" up = .25 Markup = .20 With a cost of 1.00 and a sales price of $1.25 Is this a universal understanding of the terms mentioned? If so that's a simple way to word it. In my experience, no. Those who have taken business or accounting classes, and most people who have run/managed a business will know the distinction. But for the average person, the terms "profit margin", "marking it up", etc are all interchangeable for "markup", and most people will answer $1.20 to the OP. Nope. Those people should have paid closer attention in class. Markup does not equal margin. I'll take a 50% margin over a 50% markup any time. 50% margin means I doubled my money. 50% markup means just that - marked up 50% ovee cost. Posted Via AR15.Com Mobile |
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Posted: 7/25/2013 1:37:11 PM EDT
[#28]
Profit does not equal markup. Profit is simply that...profit, the amount you take away after all other costs and expenses.
So the answer is, it totally depends on your business. If you have a dollar (the product), and you have a store that you sell it in, with a sales staff, and electric bills, etc etc etc, you have to build a portion of those business costs into your markup. Let's say those overhead and administrative costs amount to a 40 cent markup. Your cost of the product is now $1.40. Had you sold that dollar for $1.20...you actually lose 20 cents. If you sell it for $1.40, you break even and earn no profit. If your desire is to bring home 20% profit in that scenario, then you must charge $1.68. or $1.40 x 1.2 So again, how you calculate profit depends entirely on your business costs and how your business is structured. You're welcome. |
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Posted: 7/25/2013 2:22:20 PM EDT
[#29]
Quote HistoryQuoted: Profit does not equal markup. Profit is simply that...profit, the amount you take away after all other costs and expenses. So the answer is, it totally depends on your business. If you have a dollar (the product), and you have a store that you sell it in, with a sales staff, and electric bills, etc etc etc, you have to build a portion of those business costs into your markup. Let's say those overhead and administrative costs amount to a 40 cent markup. Your cost of the product is now $1.40. Had you sold that dollar for $1.20...you actually lose 20 cents. If you sell it for $1.40, you break even and earn no profit. If your desire is to bring home 20% profit in that scenario, then you must charge $1.68. or $1.40 x 1.2 So again, how you calculate profit depends entirely on your business costs and how your business is structured. You're welcome. Are you unfamiliar with the differentiation between the concepts of "gross profit" (typically the difference between selling price and cost of goods, possibly cost of goods + inbound freight) and "net profit" which takes into account other expenses (like your example above)? |
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Posted: 7/25/2013 2:33:04 PM EDT
[#30]
Quote HistoryQuoted:
$1.00 / .8 = $1.25 selling price This gives you a 20% profit margin. Quote HistoryQuoted:
Quoted:
So you have $1.00 and want to mark it up 20% how much would you charge the customer? $1.00 / .8 = $1.25 selling price This gives you a 20% profit margin. this is how we do it in the parts store |
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Posted: 7/25/2013 3:51:54 PM EDT
[#31]
Quote HistoryQuoted:
this is how we do it in the parts store Quote HistoryQuoted:
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Quoted:
So you have $1.00 and want to mark it up 20% how much would you charge the customer? $1.00 / .8 = $1.25 selling price This gives you a 20% profit margin. this is how we do it in the parts store This is how we do it as well |
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