Profit Margin Calculation

[Pafranklin]

Hi,

Please let me start with I know this is a silly question but I've been working on this for some time and its driving me mad so I'm after some validation and confirmation please.

I am looking to calculate a profit margin based on an online sale after allowing for VAT, carriage, Fees, item cost etc.

This is where I have got to:

Cost price (ex-VAT) £10.00
VAT on cost price £2.00

Carriage Fees £2.61
VAT on Carriage Fees £0.52

Selling Platform Fees (15% with no VAT). Therefore in this example (selling for £21.06) the selling fees would be £3.16

I sell the item for £21.06 and this includes £3.51 of VAT

Therefore my profit is £21.06 less £3.51 of VAT, plus £2.52 of reclaimable VAT, less item cost of £10.00 (ex-VAT) and less carriage cost of £2.61 (ex-VAT) making a profit on this sale of £4.30 (20.44%)

Please can someone take a look and confirm or put me back on the straight and narrow???

Many thanks in advance.
Paul

 

[STDFR33]

You're over complicating things. Just look at everything excluding VAT.

Sales £17.55

Less:
Cost (£10.00)
Carriage (£2.61)
Seller fees (£3.16)

Gross profit £1.78

 

[Pish_Pash]

Gross profit £1.78

Which - being gross - probably isn't enough!

 

[nelioneil]

Think personally you should look into increasing your sales price. Your gross profit margin is just 10%. What are your admin/other expenses like?