Calculating profit

Discussion in 'Accounts & Finance' started by peterb20, Sep 9, 2019.

  1. TreeStory

    TreeStory UKBF Newcomer Free Member

    6 0
    If you'd like to make 20% gross profit, you need to mark up by 25%.

    So just multiply your costs by 1.25.

    Of course you need to ensure you have enough in that 20% gross profit to cover overheads and other costs which are not direct costs of sales. And consider if the market can bear higher pricing.

    Or carry on as you are with your 20% mark up/16.6% gross profit if you're happy with that.

    Disclaimers:
    I don't have a maths degree.
    I am not an accountant.
     
    Posted: Sep 12, 2019 By: TreeStory Member since: Sep 12, 2019
    #21
  2. MBE2017

    MBE2017 UKBF Ace Free Member

    1,060 278
    They can work out an estimated break even based on predicted sales, what if they do not sell enough items? Then your profit never materialises.
     
    Posted: Sep 12, 2019 By: MBE2017 Member since: Feb 16, 2017
    #22
  3. Mr D

    Mr D UKBF Legend Free Member

    16,716 1,859
    Or you can use actual data as it happens to work out the break even point. And see that after that is profit.
    Much simpler than estimating when your products don't all have the same profits.
     
    Posted: Sep 12, 2019 By: Mr D Member since: Feb 12, 2017
    #23
  4. MBE2017

    MBE2017 UKBF Ace Free Member

    1,060 278
    Never suggested estimating, your original point was what I replied too, but I think he gets the idea by now.
     
    Posted: Sep 12, 2019 By: MBE2017 Member since: Feb 16, 2017
    #24
  5. Mr D

    Mr D UKBF Legend Free Member

    16,716 1,859
    You suggested estimated.
    I find that hard as so many different items with different profit amounts. Actual profit is easy as I keep a running score of sales in a month. Say AAA has a profit of £1.10 and AAB has a profit of £1.50 and AAC a profit of £1.90 I can enter all those profit levels into daily spreadsheet and see what point its reached.
     
    Posted: Sep 12, 2019 By: Mr D Member since: Feb 12, 2017
    #25