Calculation of trade margin
Posted: Sun Dec 22, 2024 6:56 am
The company calculates the size of the trade markup independently. However, the seller has the opportunity to use the recommendations of the Ministry of Economy of the Russian Federation dated 06.12.1995 as assistance. Calculating the markup is a mandatory skill for any seller. Only trading at profitable prices can lead to the required level of income. Therefore, it is important to know how the size of the trade markup is calculated.
The total cost of a unit of goods russian business email list consists of the purchase price and the trade markup, which includes:
planned profitability of the organization;
VAT.
When calculating the markup, it is necessary to take into account its ability to cover all costs and provide financial benefits. The formula for trade markup is as follows:
H (in percent) = (B / C) x 100% or H = (C – C) / C x 100%
Where:
B – gross profit;
C – selling price;
C – cost price.
Calculation of trade margin
Source: shutterstock.com
Let's look at an example:
In May, the company sold products worth 200 thousand rubles. The cost of goods sold was 90,000 rubles, other costs - 30,000 rubles.
The markup calculation will be as follows:
H = (200 thousand – 90 thousand) / 90 thousand x 100% = 122%.
Formula for calculating the percentage of premium for written-off goods:
P = (N + M + V) / (V + O) x 100%
Where:
P – average percentage of premium;
H – markup on the remaining products at the beginning of the reporting period;
P – surcharge for products received during the month;
B – revenue from sales;
O – the balance of production at the end of the reporting period.
The calculation of the amount of the premium is based on the percentage received.
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"Lead generation - what is it? Basic methods and how to manage them"
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Recalculation of trade margins
Experts recommend regularly calculating the realized trade margin with periodic adjustments. If any products are stored in warehouses for quite a long time, they must be sold under a loyalty program or as part of promotions and sales. If further development of the company is planned, it is necessary to increase the sale of products, for which their cost is reduced. This leads to the attraction of new buyers, clients and contractors. Business should always be flexible, including in the area of pricing.
New Project Allowance
If a business has just opened, then entrepreneurs are not recommended to immediately set a large surcharge, since it is first necessary to attract customers with favorable conditions and low prices, which competitors cannot offer.
Recalculation of trade margin
Source: shutterstock.com
As a result of such actions, the new organization will be provided with a large flow of potential clients, and will also ensure a good and stable turnover. With an eye on competitors, you can also use dumping pricing techniques, because subsequently the prices for goods will still be comparable to the average market indicators, and at the beginning of the journey it is important to attract as many buyers as possible.
Seasonal adjustments
Reducing the markup during periods of lowest demand is the main tool for successful entrepreneurship. It should be understood that its use does not entail any economic losses, since customers prefer to purchase in advance, and this results in increased turnover. For example, some people prefer to buy summer clothes in winter, and winter clothes in summer. Holiday discounts and other special offers also work well.
The total cost of a unit of goods russian business email list consists of the purchase price and the trade markup, which includes:
planned profitability of the organization;
VAT.
When calculating the markup, it is necessary to take into account its ability to cover all costs and provide financial benefits. The formula for trade markup is as follows:
H (in percent) = (B / C) x 100% or H = (C – C) / C x 100%
Where:
B – gross profit;
C – selling price;
C – cost price.
Calculation of trade margin
Source: shutterstock.com
Let's look at an example:
In May, the company sold products worth 200 thousand rubles. The cost of goods sold was 90,000 rubles, other costs - 30,000 rubles.
The markup calculation will be as follows:
H = (200 thousand – 90 thousand) / 90 thousand x 100% = 122%.
Formula for calculating the percentage of premium for written-off goods:
P = (N + M + V) / (V + O) x 100%
Where:
P – average percentage of premium;
H – markup on the remaining products at the beginning of the reporting period;
P – surcharge for products received during the month;
B – revenue from sales;
O – the balance of production at the end of the reporting period.
The calculation of the amount of the premium is based on the percentage received.
Read also!
"Lead generation - what is it? Basic methods and how to manage them"
Read more
Recalculation of trade margins
Experts recommend regularly calculating the realized trade margin with periodic adjustments. If any products are stored in warehouses for quite a long time, they must be sold under a loyalty program or as part of promotions and sales. If further development of the company is planned, it is necessary to increase the sale of products, for which their cost is reduced. This leads to the attraction of new buyers, clients and contractors. Business should always be flexible, including in the area of pricing.
New Project Allowance
If a business has just opened, then entrepreneurs are not recommended to immediately set a large surcharge, since it is first necessary to attract customers with favorable conditions and low prices, which competitors cannot offer.
Recalculation of trade margin
Source: shutterstock.com
As a result of such actions, the new organization will be provided with a large flow of potential clients, and will also ensure a good and stable turnover. With an eye on competitors, you can also use dumping pricing techniques, because subsequently the prices for goods will still be comparable to the average market indicators, and at the beginning of the journey it is important to attract as many buyers as possible.
Seasonal adjustments
Reducing the markup during periods of lowest demand is the main tool for successful entrepreneurship. It should be understood that its use does not entail any economic losses, since customers prefer to purchase in advance, and this results in increased turnover. For example, some people prefer to buy summer clothes in winter, and winter clothes in summer. Holiday discounts and other special offers also work well.