But there are average indicators for segments that you can build on:

• clothing and shoes: from 40 to 105% markup
• souvenirs, accessories and jewelry: more than 100%
• spare parts for cars, auto and motorcycle accessories: 30 - 55%
• household goods, stationery: 25 - 65%
• cosmetics: 25 - 75%

So, to calculate the final cost of a product, you need to multiply the cost by the markup percentage, and then add the resulting number to the purchase price. Example: your supplier sold you perfume for $50. The markup for cosmetics can vary from 25 to 75 percent. Let's say you choose 40%. 50$ * 40% = 20. Your selling price in this case: 50+20=70$ The markup percentage can also be calculated in reverse. To do this, divide the final cost by the purchase price and subtract one. Example: you are selling a kit bed linen at a cost of $40.

How to calculate margin and markup in excel

The cost should be equal to zero ((10-0)/10*100=100%), which, as you know, does not happen! Like all relative (expressed as a percentage) indicators, markup and margin help to see processes in dynamics. With their help, you can track how the situation changes from period to period. Looking at the table, we clearly see that the markup and margin are directly proportional: the higher the markup, the greater the margin, and therefore the profit.

The interdependence of these indicators makes it possible to calculate one indicator given the second. Thus, if a company wants to reach a certain level of profit (margin), it needs to calculate the markup on the product, which will allow it to obtain this profit. As an example, let's calculate: - margin, knowing the amount of sales and markup; — markup, knowing the amount of sales and the margin. How to calculate the margin, knowing the markup and the amount of sales (price)? For example, we know that: Sales amount = 1000 rubles.

How to calculate the markup: formulas and examples

TN = (T1* RTN1 + T2* RTN2 +… + Tn*RTNn) / 100

Т1, Т2,…, Тn – trade turnover for different product groups РТН1, РТН2,.. РТНn - coefficient of markups that correspond to these groups РТНn = ТН%n/ (100 + ТН%n) * 100 ТН%1, ТН%2 ,…ТН%n – mark-ups for each group of goods Example of calculating trade margins The company’s turnover for the quarter is 20,481,000 rubles. The established markup percentage was 22%. We find the amount of the markup: where T – t/turnover, RTN – % of the calculated markup.

RTN = TN%/ (100 + TN) * 100, where TN% is the % of the premium accepted in the company. RTN = 22/(100+22)*100 = 18% TN = 20,481,000 * 18/100 = 3,686,580 rub. What determines the size of the markup? Markups are present as in wholesale trade, and in retail.
The main purpose is to cover all costs and make a profit.

How to calculate the markup on a product?

Important

To do this, divide the sales price by the purchase price and subtract one. For example, we sell 1 kg of bananas for 45 rubles. The purchase price was 35 rubles. Thus, the markup is 45 / 35 – 1 = 28.5 (%) 3 Calculating the competitor’s purchase prices In order to calculate the competitor’s purchase prices, we select a category of goods for comparison. Then we add to the average markup this species unit of goods and divide the competitor’s selling price by this amount. For example, we have a direct competitor who sells shoes purchased from our supplier.

We need to find out if the supplier is giving him more favorable prices. A pair of shoes from a competitor costs 3,500 rubles. We know that under the terms of the contract with the supplier, the average markup on shoes can be no more than 60%.

How to correctly calculate the markup percentage?

The concepts of markup and margin (people also call it “gap”) are similar. They are easy to confuse. Therefore, first, let's clearly define the difference between these two important financial indicators. We use markup to set prices, and margin to calculate net profit from total income.
IN in absolute terms markup and margin are always the same, but in relative (percentage) terms they are always different. Formulas for calculating margin and markup in Excel A simple example for calculating margin and markup. To implement this task we need only two financial indicators: price and cost. We know the price and cost of the product, but we need to calculate the markup and margin. Formula for calculating margin in Excel Create a table in Excel, as shown in the figure: In the cell under the word margin D2, enter the following formula: As a result, we get the margin volume indicator, for us it was: 33.3%.

3 ways to calculate trade margins

Attention

This indicator should cover all costs, and also allow you to receive income, for example, revenue from sales of goods. A businessman who already knows the amount of markup on his goods can calmly take the next steps in business development. The markup indicator is defined as the difference between the proceeds and the purchase price of the product.

Calculations are made using the following characteristics:

• Trade turnover;
• The range of goods in trade turnover;
• Markup percentage.

Formulas for calculating markup on goods

1. TN = T*RTR/100

T – turnover RTN – calculated markup (%) TN – markup on goods RTN = TN%/ (100 + TN) * 100 This method for calculating the markup is perfect for an enterprise in which the percentage for the price of the entire volume of goods is set to the same.

Trade margin in retail trade. calculation formula

Author KakSimply! Every entrepreneur is interested in the question of how to calculate the markup for at least two reasons. Firstly, in order to correctly price your products. Secondly, in order to calculate at what prices competitors are purchasing.
Related articles: You will need

• calculator, pen and paper

Instruction 1 What is a markup? Mathematically, a markup is a percentage (less often a fixed) markup on the purchase price of a product. The markup added to the purchase price forms the final selling price. It is paid by the buyer. With a sufficient sales volume, the markup should be enough for the entrepreneur not only to pay all related business expenses, but also to make a profit.
2 We carry out pricing Regardless of what prices suppliers give, our final price must, first of all, satisfy buyers.

Online calculator for calculating trade margins as a percentage with formula

Trade margin shows how much the selling price of a product is more costs related to its acquisition. These costs may include, for example, the purchase price or costs associated with the delivery of products. If the enterprise produces products independently, then in this case the cost will appear.

Markup as a percentage In order to calculate the markup percentage, you need to know the retail price and the price for which this product cost the seller. The markup percentage will be calculated using the following formula: % markup = (sales price / wholesale price - 1) * 100%. There is also this option: % markup = (sales price - wholesale price) / wholesale price * 100%.

The selling price is the price for which the seller sells the goods to the buyer. Wholesale price- this is the price for which the product was purchased from the supplier.

Lakoff / calculation of markups and margins

What determines the markup on a product? The markup level depends on:

• the product itself, its consumer properties, quality and demand, competitiveness of the manufacturer who produces the product;
• expenses associated with organizing sales (storage, transportation, delivery of goods to the final consumer);
• from the tax amount. The tax percentage is usually added to the markup on the product, thanks to which the company protects itself from losses.

How to mark up a product correctly? The final price at which you will offer your product should first of all satisfy buyers. Therefore, in trading there are no strictly established coefficients that must be adhered to when pricing.

How to calculate the markup on a product formula

Formula for calculating the markup in Excel Move the cursor to cell B2, where the calculation result should be displayed, and enter the formula into it: As a result, we get the following indicator of the markup share: 50% (easy to check 80+50%=120). Difference between margin and markup with example Both of these financial indicators consist of profit and expenses. What is the difference between markup and margin? And their differences are quite significant! These two financial ratios differ in the way they are calculated and the results in percentage terms. Markups allow businesses to cover costs and make a profit. Without it, trade and production would go into minus. And the margin is the result after the markup.

How to calculate the markup on a product as a percentage formula

The following selling strategies are used:

• Sell ​​goods at a low price, but in large volumes;
• Sell ​​goods at high price, but in small volumes.

The markup on a product shows how much profit the costs of purchasing the product and its sale brought. When the markup on a product is correctly registered, sales will be carried out at a rapid pace, and the income will fully cover the costs of purchasing and storing the product. Consequently, profit depends on the markup. How to calculate the markup?

• When goods arrive at the enterprise, the markup is reflected in the debit of 41, as well as the credit of account 42.
• When placing a product for sale, in order to see the result of financing, the markup should be set by calculation.

Let's figure out how we will mark up the goods that we sold during the reporting period.

A. Grishin, expert analyst at JSC Consulting group"MIRROR""

In every company that sells, there is a difference between the amount that the buyer sees on the price tag and the amount at which the company purchased a certain product. The director focuses on market prices and instructs the accountant to make one or another trade markup. How to calculate it correctly, this is already headache humble worker accounting.

All extras are good - choose according to your taste The amount of realized trade margin, and therefore the purchase price of goods sold, can be calculated on a computer. In companies that engage in retail and use similar equipment, the markup can be determined automatically for each product sold. At the same time, it will be much easier for an accountant to determine the financial result. However, not everyone can afford to have such expensive software. Small shops and stalls usually determine the trade margin by calculation, or, in other words, manually. Back in 1996, Roskomtorg, in its letter dated July 10 No. 1-794/32-5, approved the Methodological Recommendations for accounting and registration of operations for the receipt, storage and release of goods in trade organizations. In them, the committee proposed several options for calculating the realized trade margin. To date, there are no other official documents establishing other methods. In accordance with paragraph 12.1.3 of the methodological recommendations of Roskomtorg, the markup can be determined by the total turnover, by the assortment of turnover, by the average percentage, by the assortment of the remaining goods. Let's consider these methods in more detail. The same percentage wants to meet The method for calculating gross income based on total turnover, according to paragraph 12.1.4 of the methodological recommendations, is used if the same percentage of trade markup is applied to all goods. This option involves first establishing the gross income from sales turnover (VD), and then the markup. The accountant must apply the formula given in the document: VD = T x RN: 100 (T - total turnover, RN - estimated trade markup). The estimated trade markup is calculated using another formula: RN = TN: (100 + TN). In this case, TN is the trade markup as a percentage. At the same time, according to paragraph 2.2.3 of the methodological recommendations, trade turnover is understood as total amount revenue (including all taxes).

Example 1 At Romantik LLC, the balance of goods at sales value (account 41 balance) as of July 1 amounted to 12,500 rubles. The trading margin on the balance of goods as of July 1 (account balance 42) is 3,100 rubles. Products received in July purchase price excluding VAT in the amount of 37,000 rubles. According to the order of the head of the organization, the accountant must charge a trade margin on all goods in the amount of 35 percent of their purchase price. Its amount for goods received in July was 12,950 rubles. (RUB 37,000 x ґ 35%). The company received 51,000 rubles from sales in July. (including VAT - 7780 rubles). Selling expenses – 5000 rub. Let's calculate the realized trade margin using the formula РН = ТН: (100 + ТН): 35%: (100% + 35%) = 25.926%. We find gross income using the formula VD = T x RN: 100: 51,000 rubles. x 25.926%: 100% = 13,222 rub. The following entries must be made in accounting: Debit 50 Credit 90-1– 51,000 rub. – revenue from the sale of goods is reflected; Debit 90-3 Credit 68Debit 90-2 Credit 42– 13,222 rub. – the amount of trade margin on goods sold is written off; Debit 90-2 Credit 41– 51,000 rub. – the sales value of goods sold is written off; Debit 90-2 Credit 44Debit 90-9 Credit 99– 442 rub. (51,000 – 7780 – (–13,222) – 51,000 – 5000) – profit from the sale.

Different surcharge for the entire assortment This option is needed for those who have different markups for different groups of goods. The difficulty is that each of the groups includes products with the same premium. In this case, mandatory accounting of trade turnover is necessary. According to paragraph 12.1.5 of the methodological recommendations, gross income (GI) is determined by the following formula: VP = (T1 x RN + T2 x RN + ... + Tn x RN): 100 (T - trade turnover and RN - estimated trade markup for product groups).

Example 2 The accountant of Romantik LLC has the data shown in the following table:

	Balance of goods as of July 1, rub.	Goods received at purchase price, rub.	Trade margin, %	Amount of markup, rub.	Revenue from the sale of goods, rub.	Selling expenses, rub.
Products of group 1	4600	12 100	39	4719	16 800	3000
Products of group 2	7900	24 900	26	6474	33 200
Total	12 500	37 000		11 193	50 000

He needs to determine the estimated trade markup for each group of goods. For group 1, the estimated trade markup is calculated using the formula РН = ТН: (100 + ТН): 39%: (100% + 39%) = 28.057%. For group 2: 26%: (100% + 26%) = 20.635%. Gross income (the amount of realized trade margin) will be equal to: (16,800 rubles x 28.057% + 33,200 rubles x 20.635%): 100 = 11,564 rubles. The following entries must be made in the company's accounting records: Debit 50 Credit 90-1– 50,000 rub. – revenue from the sale of goods is reflected; Debit 90-3 Credit 68– 7627 rub. – the amount of VAT is reflected; Debit 90-2 Credit 42– 11,564 rub. – the amount of trade margin related to goods sold is written off; Debit 90-2 Credit 41– 50,000 rub. – the sales value of goods sold is written off; Debit 90-2 Credit 44– 3000 rub. – sales expenses are written off; Debit 90-9 Credit 99– 937 rub. (50,000 – 7627 – (–11,564) – 50,000 – 3000) – profit from the sale.

"Golden mean This method is the simplest. It can be used by any company that records goods at sales prices. According to paragraph 12.1.6 of the recommendations, gross income by average percentage should be calculated using the formula: VD = (T x P): 100 (P - average percentage of gross income, T - turnover). The average percentage of gross income will be equal to: P = ((TNn + TNp – TNv): (T + OK)) x 100. Let's analyze the indicators of the last formula: ТНн – trade markup on the balance of products at the beginning of the reporting period (account balance 42); ТНп – markup on goods received during this time, ТНв – on goods disposed of (debit turnover of account 42 “Trade margin” for the reporting period). Under disposal in in this case understand the return of goods to suppliers, write-off of damage, etc. OK – balance at the end of the reporting period (account balance 41).

Example 3 The accountant of Romantik LLC identified the balance of goods as of July 1 (account balance 41). The sales price was 12,500 rubles. The amount of the trade margin on this balance is 3,100 rubles. Within a month, 37,000 rubles were received at the purchase price of goods. (excluding VAT). The markup accrued on products received in July is 12,950 rubles. During the month, income from sales was received in the amount of 51,000 rubles. (including VAT - 7780 rubles). The balance of goods at the end of the month amounted to 11,450 rubles. (12,500 + 37,000 + 12,950 – 51,000). Selling expenses – 5000 rub. The realized trade margin should be calculated as follows. First, we find out the average percentage of gross income - P = ((TNn + TNp - TNv): (T + OK)) x 100: ((3100 rub. + 12,950 rub. - 0 rub.) : (51,000 rub. + 11 450 rub.)) x 100% = 25.7%. Then we calculate the amount of gross income (realized trade margin): (RUB 51,000 x 25.7%): 100% = RUB 13,107. The following entries need to be made in accounting: Debit 50 Credit 90-1Debit 90-3 Credit 68– 7780 rub. – the amount of VAT is reflected; Debit 90-2 Credit 42– 13,107 rub. – the amount of trade margin on goods sold is written off; Debit 90-2 Credit 41– 51,000 rub. – the selling price is written off; Debit 90-2 Credit 44– 5000 rub. – sales expenses are written off; Debit 90-9 Credit 99– 327 rub. (51,000 – 7780 – (–13,107) – 51,000 – 5000 rubles) – profit from the sale (financial result).

Let's count what's left To calculate gross income for the assortment of the balance, the accountant will need data on the amount of the trade margin for the product that was identified at the end of the reporting period. To obtain this information, it is necessary to keep records of the accrued and realized markup for each item or for groups with the same methods for calculating the trade markup. As a rule, to determine this amount, an inventory is carried out at the end of each month. This method is the most labor-intensive. It is usually used by companies either with a small turnover or those that have the appropriate software. According to paragraph 12.1.7 of the methodological recommendations, the calculation of gross income for the range of remaining goods is carried out using the formula: VD = (TNn + TNp – TNv) – TNk. The indicators mean the following: ТНн – trade markup on the balance of goods at the beginning of the reporting period (account balance 42 “Trade markup”); ТНп – trade markup on products received during the reporting period (credit turnover of account 42 “Trade margin” for the reporting period); ТНв – trade markup on disposed goods (debit turnover of account 42 “Trade markup”); TNK - markup on the balance at the end of the reporting period.

Example 4 The amount of the trade margin related to the balance of goods as of July 1 (account balance 42) is 3,100 rubles. The accrued premium for products received in July is 12,950 rubles. During the month, the company earned 51,000 rubles from sales. The markup on the balance of goods at the end of the month, according to inventory data (account balance 42), is 2050 rubles. Selling expenses – 5000 rub. Let's calculate the realized trade margin - VD = (TNn + TNp - TNv) - TNk: (3100 rubles + 12,950 rubles - 0 rubles) - 2050 rubles. = 14,000 rub. The following entries must be made in accounting: Debit 50 Credit 90-1– 51,000 rub. – revenue from the sale of goods is reflected; Debit 90-3 Credit 68– 7780 rub. – the amount of VAT is reflected; Debit 90-2 Credit 42– 14,000 rub. – the amount of trade margin on goods sold is written off: Debit 90-2 Credit 41– 51,000 rub. – the sales value of what was sold is written off; Debit 90-2 Credit 44– 5000 – sales expenses written off; Debit 90-9 Credit 99– 1220 rub. (51,000 – 7780 – (–14,000) – 51,000 – 5000) – profit from the sale.

What do we end up with? In all of the methods discussed above for calculating the realized margin (with the exception of the average percentage method), the result obtained (the amount of the realized margin) can be used when calculating income tax in order to find the purchase price of the goods sold. But, for example, in accounting, interest on a loan before accepting goods is included in their cost. For tax accounting Such interest is included in non-operating expenses. Using the method of finding the markup based on the average percentage, the purchase price of the goods sold in accounting may not coincide with the same indicator in tax accounting. This is because different groups may have different premiums. When calculating the realized markup in accounting, all data is averaged. In the tax authorities, according to Article 268 of the Tax Code, proceeds from sales are reduced by the cost of purchased goods, which is determined in accordance with accounting policies.

Extra charge?
Mathematically, the markup is a percentage (less often, a fixed) markup to the purchase price of a product. The markup added to the purchase price forms the final selling price. It is paid by the buyer. With a sufficient sales volume, the markup should be enough for the entrepreneur not only to pay for all the associated expenses, but also to make a profit.

We carry out pricing
Regardless of what prices suppliers give, our final price must, first of all, satisfy customers. Therefore, when conducting pricing, there are no clearly established premium coefficients. The markup for each type of product varies depending on many conditions.
In the current practice of retail trade, the following markups are usually applied:

On – from 10 to 35%

On and shoes – from 40 to 110%

For household and stationery– from 30 to 60%

For souvenirs, jewelry – 100% and above

For cosmetics – from 30 to 70%

For auto parts – from 30 to 60%
In order to calculate the selling price, we multiply the purchase price by the markup percentage. We add the resulting value to the purchase amount. For example, a supplier brought us a bumper cover for a car for 1,940 rubles. For the final sale we set a markup of 35%.
1940 * 35% = 679
Our selling price will be 1940 + 679 = 2619 (rub.)
The markup can be calculated in reverse. To do this, divide the sales price by the purchase price and subtract one. For example, we sell 1 kg of bananas for 45 rubles. The purchase price was 35 rubles.
Thus, the markup is 45 / 35 – 1 = 28.5 (%)

We calculate the competitor's purchasing prices
In order to calculate a competitor’s purchasing prices, we select a product category for comparison. Then we add one unit to the average markup for this type of product and divide the competitor’s selling price by this amount.
For example, we have a direct competitor who sells shoes purchased from our supplier. We need to find out if the supplier is giving him better prices. A pair from a competitor costs 3,500 rubles. We know that under the terms of the contract with the supplier, the average markup on shoes can be no more than 60%. We calculate the purchase price.
3500 / 1.6 = 2187.5 rub.
By comparing several product items in this way, we get a general understanding of the competitor’s purchasing prices. Knowing the principles of markup formation, it is not possible to calculate this indicator for any product.
We hope that now you can correctly calculate the markup at any time and in any store you like.

First of all, it is necessary to keep in mind that the definition of trade margin depends on the subject and purpose of the definition. From point of view trading enterprise markup has several economic meanings. First of all, the trade margin determines the profit of the enterprise. Yes, according to Methodological recommendations for accounting and registration of operations for the reception, storage and release of goods in trade organizations (approved by the Letter of Roskomtorg dated July 10, 1996 No. 1-794/32-5), the trade margin is the difference between the proceeds from sales and the purchase price of goods.

Instructions

Thus, at the pricing stage, the trade margin is determined by the enterprise independently. Most often, the trade margin is set as a fixed percentage of the purchase price of goods. For example, with a purchase price of goods of 100 rubles and a trade margin of 30%, the trade margin will be 30 thousand rubles, and the retail price will be 130 thousand rubles.

For tax accounting purposes, the trade margin is determined in accordance with the above-mentioned Methodological Recommendations in several ways.

By total trade turnover:

VD = T x RN: 100,

where T is the total turnover,

RN - estimated trade markup,

RN = TN: (100 + TN) x 100, where TN is the trade markup, %

How to calculate the markup on a product? This is a question that entrepreneurs usually ask. This is not just idle curiosity, but real practical interest. In this way, it is possible to establish an adequate price for your own products, as well as find out the approximate purchasing prices of competitors.

Definition

Before you begin mathematical calculations, you need to understand the terms. So, the percentage of markup on goods is the size of the markup to the cost of the goods, after adding which the final price for the consumer is formed.

If the premium is calculated correctly, the entrepreneur will be able not only to cover his own expenses associated with organizing a business, but also to make a profit from his own activities. As a rule, the markup is expressed as a percentage calculated from the cost of a particular product.

What affects the size of the markup?

If there are several factors on which the percentage of the premium depends.

• Features of the product, consumer qualities, level of demand and competitiveness of the manufacturer under whose brand this or that product is produced.
• Costs of organizing sales. Here, entrepreneurs usually include the costs of storage, logistics, staff payments, etc.
• Tax amount. The amount of each product necessarily includes value added tax. It may differ for each product category. However, in any case, the VAT rate affects the final cost of the product.

Approximate markups

When wondering how to calculate markup percentages, you need to understand that the final cost must certainly be competitive. If another seller has an identical product at a lower price, there is a high probability that you will not be able to attract buyers. That is why most entrepreneurs strive to minimize costs that directly affect the final cost.

Average markup on goods in retail trade depends on the category. Below are the averages:

• Clothes and shoes. From forty to one hundred percent.
• Souvenirs and jewelry. More than one hundred percent.
• Various accessories. More than one hundred percent.
• Automotive products. From thirty to fifty percent.
• Stationery. From twenty-five to sixty-five percent.
• Cosmetics. From twenty-five to seventy-five percent.

Now you know what percentage of markup in retail trade is usually set depending on the category of goods sold by the seller.

Price calculation using an example

So, let's assume that you are calculating the final cost of an item. To do this, the cost of your product must be multiplied by the markup percentage. This way you can find out the additional amount. Now all that remains is to add it to the purchase price, and thus you will find out the final cost of the product being sold.

If you purchase a unit of goods from a supplier for fifty rubles, and the markup is forty percent, then you will need to add a markup to the original price. In our example, in monetary terms it is twenty rubles. That is, the final cost of the product for a potential consumer will be seventy rubles.

How to calculate the markup on a product?

If you know the purchase and final cost of the product, calculating the markup percentage is easy.

To do this you just need to take a few simple steps:

• First, the final cost per unit of goods must be divided by the purchase price.
• You need to subtract one from the resulting result.

So, if one product is sold at a price of forty conventional units, and the purchase price is twenty-five conventional units, in accordance with the above scheme it is easy to calculate the size of the markup. In this case it is sixty percent.

However, in most cases, the question of how to calculate the markup on a product is relevant when the final cost is not yet known. In this case, the calculation is performed in a slightly different way.

Calculation formula

To avoid all sorts of mistakes, most entrepreneurs use a simple formula that allows them to calculate trade margins:

TN = ST * % TN

ST - cost of goods

% TN - percentage of assigned trade margin

TN - the size of the trade margin in monetary terms.

As you understand, to use this formula for calculating the percentage of markup on a product, you need to know the percentage of the established markup. We will tell you how to do this below.

How to set a markup?

So, to determine the size of the premium by which the purchase price will be increased, potential sellers usually take into account a number of factors:

• Initial costs.
• Threshold cost.
• Sales segment.
• Elasticity of demand.
• Availability of additional services.
• Buyers' interests.
• Presence of competitors in the selected segment.

Now you know how to mark up a product as a percentage. However, the points listed above require some clarification.

Initial costs

Mandatory accounting of all costs will allow you to correctly calculate the markup percentage. This category includes not only the purchase price of the product, but also related costs. For example, for the delivery of goods from the manufacturer to the final buyer. If we are talking about own production, additional expenses still can't be avoided. As costs, you need to take into account the costs of equipment, wages of employees, etc. Only after determining the initial costs can you move on to the question of how to calculate the markup on a product.

Threshold cost

This is what economics calls the minimum price, at which the seller will not incur financial losses, but will not make a profit. The threshold cost must certainly cover all costs not only for the purchase of goods, but also for their storage, as well as transportation. Some entrepreneurs make the mistake of focusing exclusively on competitors and neglecting to calculate the threshold cost. Such a disdainful attitude towards own business may result in monetary losses.

Sales segment

The percentage of trade margin depends not only on costs and demand for the product, but also on the business segment. It's interesting that for different categories It is customary to set different markups for goods on the market. In addition, there are product categories that are in high demand during certain seasons, which allows potential sellers to increase prices, while simultaneously increasing the markup percentage.

Elasticity of demand

This is special economic indicator, which allows you to find out how much a decrease or increase in price affects the level of consumer demand. If a product has elastic demand, it begins to sell well when discounts are established. If demand is inelastic, the presence of a discount has no effect on sales of the product. That is why, even before establishing discounts with elastic demand, it is necessary to include in the price the further possibility of providing discounts.

Availability of additional services

Some sellers offer additional free services to their customers for marketing purposes. This approach often works, increasing demand for the main product. It is worth noting that the organization of providing additional free services, as a rule, does not imply any costs for the seller. For example, such a service could be payment in installments over several months, which is important when selling expensive goods. Such offers attract potential customers, which will allow the seller to increase the size of the trade margin.

Buyers' interests

When setting a trade margin, you need to understand that the final cost of the product, which is obtained as a result of calculations, must be acceptable to potential buyers.

An acceptable price depends on many factors:

• Type of product.
• Location and, accordingly, trafficability of the outlet.
• The presence of competitors in your industry, etc.

If we are talking about a medium-sized business, deviations from the price set by competitors, as a rule, do not exceed twenty-five percent, up or down. Only large retail outlets can afford more serious deviations from the average market indicators established by the market.

Presence of competitors

The size of the price premium directly affects the final cost of the product, so it greatly depends on the presence of competitors. This is why this factor cannot be ignored. First you need to study not only consumer demand, but also the offers of your competitors. This will allow you to build a profitable sales scheme and ultimately build a successful business.

Now you know the features of calculating the markup on a product.

How to calculate the markup on a product: calculation formula. What percentage is the trade margin in retail trade - useful knowledge for business on the website

25.03.2014 177944

Some businessmen still confuse the concept of margin with the concept of trade margin and set prices for their goods, guided solely by the example of competitors. No wonder they go broke! Maxim Gorshkov, an analyst at the Academy of Retail Technologies company, gives several tips and formulas with which you can set not only non-ruining, but also profitable prices.

Commercial analyst at the Academy of Retail Technologies. Has 14 years of experience in the fashion industry, including as director-curator of the Sportgrad chain of retail stores and high-end sports stores price segment Sportcourt, and also as director of the Nike retail chain. Specializes in commercial and financial analytics of retail businesses.
www.art-rb.ru

Markup and margin - “two big differences”

In the business environment, you sometimes hear a phrase like “This company operates on a 200% margin,” which is actually incorrect, since in this case we are not talking about margin, but about markup. Unfortunately, these two concepts are often confused. Let's dot the i's and figure out what margin, markup and markup coefficient are.

When purchasing a product from a supplier, we pay a certain amount of money for it. For example, 1000 rubles per pair. This is the purchase price. When the product arrives at the store, we add an additional cost to it so that the buyer pays 3,000 rubles for a pair, which is the retail price of the product. There is also such a thing as the actual price - the price at which the product was actually sold as a result of promotions or loyalty card discounts. Having decided on the types of prices, we can understand what margin is. Margin- this is the share of added value in the retail price of a product, that is, the difference between the retail and purchase prices. It shows how much profit the company will receive if we sell the product at a given retail price. In our example, the margin, that is, the share of added value, is 2000 rubles, or 66.6%. But no matter what examples we give, the margin will always be lower than the retail price. So if you hear someone talk about margins exceeding 100%, know that they are confusing margin with markup. Trade margin- this is a certain premium on the purchase price of the product, that is, by how many percent the retail price exceeds the purchase price. In our example, the trade margin is 200%. Relatively recently, the indicator began to be used in retail trade markup coefficient. It, like the trade margin, demonstrates the ratio of the retail price to the purchase price, but is expressed not in relative terms (percentages), but absolute values, and is used only for simple calculations. The markup coefficient in our example is 3: this is exactly how many times the retail price is higher than the purchase price.

The question arises: which indicator should be used in the work? From the point of view of financial accounting and budgeting, the margin indicator is the most important, since many other calculations are associated with it. But for simple operations you can use all other indicators.

How to Set Prices That Will Make a Profit

It is possible to cover all costs and ensure profit, for which any normal business operates, with the help of a well-calculated trade margin. Our goal is to use it to set a retail price that will cover all fixed and variable costs, and will be as high as possible given the solvency of your customers. Don’t be shy about selling at a high price: if a product is bought even at a very high price, it means it’s worth it. Also, there is no need to go to the other extreme, selling goods at cost or even below it - but this happens! remember, that low prices Not only do they not provide you with customer loyalty, but they also slowly but surely ruin you - especially if you can't actually afford these pricing games. To set the right prices for your store, first ask yourself a few questions.

What is the cost of the product? Calculate the costs you incur when receiving goods in your store. They always include the purchase cost, and for non-franchise stores, most often the delivery cost. For companies that produce and then sell their assortment, the cost of goods includes the costs of raw materials, labor, designer labor and other costs.

What is the threshold price level? The threshold price is the minimum price of a product that ensures the company breaks even. It includes all costs that must be paid even if you make a discount on the product. Some sellers, inspired by the example of online competitors, reduce prices in an effort to please the buyer. But often they do not take into account the fact that networkers can really afford such price games, because they sometimes get the goods several times cheaper than for a private entrepreneur. As a result, the store owner, without calculating his threshold price, enters into a price race with a large retailer and works at a loss. He can do this until he finally goes broke or drops out of the race. By raising the price back, the seller will most likely lose customers - after all, they came to him only because of the low price - and will again be on the verge of ruin.

What is the price situation in the industry? Of course, you must understand what prices your competitors work with, and what prices consumers are willing to buy your products at.

Is demand for your products elastic? Demand is said to be elastic if it changes when price decreases or increases. Only in this case does it make sense to give a discount on the product, otherwise you won’t be able to make money. If demand is inelastic, that is, sales do not increase when the price decreases or increase only slightly, you will not be able to make a profit from selling such a product. Since in a shoe store there are categories of goods with different elasticities of demand, you must measure and calculate the elasticity of each of them using the formula E = K/C, where K is the percentage change in demand, and C is the percentage change in price.

Will additional services help increase sales? One of the most attractive services for buyers now is consumer loan for shoes. So far, only a few companies sell shoes this way, and this is strange, because the seller does not incur any costs, but only enjoys increased sales.

What price is the buyer willing to pay for the product? This indicator depends on many factors, for example, the location of the store and the income of the target audience. When we know the exact profile of the buyer, we understand well what exactly he needs and how much money per month he is willing to spend on shoes. For example, after all expenses, a client of our store has about 6 thousand rubles per month left, which means that we can set approximately the same price for most models in the store. But this is the average price, so we must add two more steps to it: 25% down and 25% up from the price. Making a price step of more than 25% in one store is not reasonable, since such a price range will blur your target audience and force you to compete with more expensive or cheaper stores, which is not at all interesting to you or your customers.

What is the nature of competition? Competition is like radiation: it is always and everywhere, but it is not visible. But you must still keep your finger on the pulse of your competitors and perform better than them. The one who monitors his rivals opens 200-300 stores a year, and the one who sells goods at cost and does not learn anything from others works with one store all his life.

Once you've figured out your pricing options and desires, use one of several pricing methods.

Method one: average costs + profit. It's pretty simple and effective method pricing, which is based on costs - and this is very important - although it does not take into account changes in the market and does not show to what extent prices can be reduced during a sale. The essence of the method is to obtain the price of a product from the sum of all costs for the reporting period and the desired share of profit. For example, we purchased goods for the season for 5 million rubles, and found out that total costs for the same period will amount to approximately 8 million rubles. If we make a markup on goods of 100%, then our profit will be only (5x2)-8 = 2 million rubles, and if we make a markup of 150%, then inventory in monetary terms will be equal to 12.5 million rubles, which in an ideal case will bring us 4.5 million rubles. It is clear that there are no “ideal” cases: the season always ends with something left over, and the market dictates its conditions to us. Some of the assortment will be sold at a discount, so in this situation a 150% markup will at least allow us to stay afloat.

Method two: price calculation based on break-even analysis. In business there is such a thing as a break-even point. The essence of the break-even principle is to establish the sales volume at which there will be no losses. The break-even point is always calculated for new businesses, since with its help it becomes clear how long the store will operate without profit, only to cover the initial investment. Some elements of break-even analysis can also be used for pricing, and this method will help us figure out what the minimum profit necessary for the survival of the business should be (something that the “average cost + profit” method cannot provide). To determine the minimum profit rate, you need to subtract variable costs from the volume of planned gross revenue and divide the resulting number by the volume of planned gross revenue. For example, (15 million – 5 million)/15 million = 0.5. This coefficient suggests that the difference between the purchase and sale prices should be 50%, otherwise we will work at a loss. Using this method, you can also calculate the trade margin. To do this, use the formula “1-(volume of planned gross revenue/variable costs)*100%”. In our example, the following calculation can be obtained: 1-(15 million/5 million)*100% = 200%. This is exactly what the trade margin should be so that we at least cover all costs without earning anything. The upper price limit is dictated only by common sense: we should sell as expensive as possible, without listening to those who advise selling the product cheaper. As a rule, such advisers turn out to be people of low stature. social status who understand little about making money.

In principle, these methods are enough to set prices that are adequate for your business. But in some cases prices are set in other ways. In particular, "current price method", when competitors’ prices are taken as a guide: this method has not yet taken root in the fashion segment, but electronics retailers are already using it. Its advantage is that it vetoes price wars, but not all stores can afford to maintain the same prices with large chain stores. "Dumping price method" used to attract buyers. Its essence is to set low prices for bestsellers, that is, for particularly attractive goods, although the prices for all other goods may even be inflated. This method can provoke price wars and give the store the image of a cheap establishment, so it should be used with caution. "Method for measuring elasticity of demand" good because it can be used to track the dependence of sales growth and profits on price changes, and the method "purchasing behavior analysis" used at the stage of introducing a new product to the market.

Some businessmen still confuse the concept of margin with the concept of trade margin and set prices for their goods, guided solely by the example of competitors. No wonder they...

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