Shopping Cart
Your Cart is Empty
There was an error with PayPalClick here to try again
CelebrateThank you for your business!You should be receiving an order confirmation from Paypal shortly.Exit Shopping Cart

If you have ever wondered exactly what a 'Mark-up' is, or how it differs from a 'Margin', look no further.

The Mark-up - What you multiply the Cost Price (CP) by to get the Selling Price (SP). Usually expressed as a percentage such as 50% or 100%. Plus VAT if appropriate - see below.

A 50% margin would be half as much again (i.e 1.5 times the CP), a 100% margin would be doubling the cost price (i.e 2 times the CP) and 150% would be one and a half times (i.e. 2.5 times the CP)

Margin - Confusingly, Margins are also expressed as a percentage but a Margin is the return on sales. This is what you make after you have paid for the cost of what was sold. Margin=(SP-CP)/SP x 100

Margins have more than one use. Since it is related to the Mark-up (i.e. a Mark-up of 100% will generate a Margin of 50%) Margins are a useful check on the business. If the SP is calculated to generate a 50% Margin, but the Profit and Loss is showing a Margin different from 50% then something unforseen is causing that and needs to be investigated.

I want a Margin of... If you want to acheive a specific margin simply take your Cost Price and divide it by 1 minus the desired Margin expressed as a decimal (i.e. CP/1-M). Again add VAT if appropriate.

If you want a Margin of say 70%. divide the CP by 1-0.70, i.e.CP/ 0.30. Alternatively make the CP 1, and add 1 to the answer to give you a Mark-up factor to multiply by. Thus 1/1-0.70 would give you 3.33, add 1 to give 4.33 and this is the Mark-up factor that will give you a 70% Margin (i.e. CP times 4.33 will give a 70% Margin) and so on.

To Add/Remove VAT - Easiest method is simply to multiply by 1 plus the VAT percentage expressed as a fraction. Thus to add 20% VAT, multiply by 1.20, or to add 5%, multiply by 1.05

This works both ways, to add the VAT - multiply, or to remove the VAT - divide. This gives you the VAT exclusive price. If you need to work out the VAT content of an inclusive price, DO NOT multiply by -20% see below.

To work out the VAT content - multiply by the VAT fraction for whatever the VAT rate was, for 20% it is 1/6, for 17.5% it is 7/47 for 5% it is 1/21

This method gives you the actual VAT content of a VAT inclusive price.

Aaaagh HELP! >>>>