How to calculate the margin

Note that mathematically the margin means a percentage (rarely solid) allowance toward the purchase price of the products. In turn, the mark-up added to the value of the purchase, forming the final price of the sale of goods. It is paid by the consumer. When a sufficient volume of sales, the amount of margin should be enough for the enterprise not only to cover all related costs of the production activities, but also for profit.

Analyze pricing. Regardless of what price you purchase the goods from suppliers, the final price must, in the first place, to arrange buyers. That is why, when pricing is no clear odds-allowances, and the size of the margins on each product will vary in accordance with many conditions.

Calculate the sale price of the goods. To do this, multiply the purchase price by the appropriate percentage of the bonuses (each item has its own percentage). The resulting value is added to the amount of purchase.

Calculate the competitive purchasing price. For these purposes, select a category of products for comparison. Then add to the average mark-up of this type of product one and then divide the sale price of the company-competitor on the amount received. Comparing thus several separate items, you will be able to get a General understanding of competitive purchase prices.

In turn, the economic meaning of the markup is quite simple: while the average sales volume of size of the trading margin should be sufficient to cover all costs of the seller and to receive them a certain profit. Note that the implementation of one product at different stages of its motion is subjected to different values of margins.