One of the most important and fundamental business calculations can be made with the business margin calculators. The price has to exceed the cost of sold goods (COGS) yo give a margin or profit. If you sell with no margin you loose money. In this section we illustrate margin with four different business margin/profit calculators: the gross margin calculator, the markup calculator, combined markup and margin calculator and the price calculator. All calculators makes calculations on price, margin and cost. The calculators can help you out with answering questions like:
At what price do we have a 40% margin on the goods we are selling?
If we lower the cost with $10, what would the markup be?
The gross profit, margin, price and sales volume
The gross margin and the gross margin percentage is depending on the price and the cost of sold goods (COGS). The higher price the higher margin and markup. The lower cost the higher margin (and markup) will be. If the price is too high you will probably have a hard time selling the product. More money have to be spent on marketing and the business risk is increasing. When you lower the price it is likely that you will sell more and you maybe need less marketing budget. The hardest part is to find the perfect balance between risk, margin/markup and volume in your business. In most companies the price is decided based on benchmarking (compare with the competition) marketing surveys (asking the customers) experience (how did similar products sell) but as you all know the final result is decided by the custmomers.
Difference between gross margin and markup percentage
The markup is the same as the margin if you measure it in dollars and cent. If we talk about margin percentage and markup percentage there is a difference. You get the margin percentage by dividing the profit (price-cost) by the price. The markup percentage you get by dividing the profit by the cost.