[quote]maxnharry's math is correct. Â I think what has thrown people off is confusing "markup" with "gross margin" Markup = The percentage of the cost of a product added to cost in order to arrive at a selling price. Â In other words, (selling price less cost) divided by cost Gross margin = The difference between net sales and cost of goods sold expressed as a percentage. Â In other words, (selling price less the cost) divided by the selling price.1) profit 2) margin 1) If you invest 1$, and your profit is 50% that means you sell at 1.5$ = 1$ out of your pocket becomes 1.5$ in you pocket. Profit = 0.5$ 2) if you invest 1$ and have a margin of 50% that means you sell at 2$ or if you sell at 1.5$ your margin is 33% = 1$ sold makes 0.33$, so when you sell 1.5$ (invested 1$) you have back in you pocket 0.33*1.5 = 0.5$. Profit = 0.5$
Quote:(imageWIS @ 22 Dec. 2004, 2:22)
Originally Posted by maxnharry,22 Dec. 2004, 5:20
I'm not certain about how this works in retail speak, but the math is very plain... A $1.00 item marked up 50% sells for $1.50 A $1.00 item marked up 100% sells for $2.00 Ah, but apparently traditional math does not apply to retail...so the question is: what exactly is the correct calculation? Jon.