Originally Posted by TYLOLA

But what i'm saying is...

Lets go by the price of £10 inc. VAT

The VAT rate is 17.5%

So why the heck is £1.49 the VAT amount of £10??? surely it should be £1.75 as this would calculate to 17.5% of £10???

£10 inc VAT is £1.49, as the £1.49 is the VAT charge making it £10.


£10+VAT basically means 10 + 17.5% which is £1.75

The VAT amount is £1.75 on £10 + VAT not £10 inc VAT.

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thanks pete for posting this useful information.

i usually try and keep it very simple and basic my accounts as i am not much of a mathmitician .

Originally Posted by Pete

So, you would multiply either 10 or 11.75 by 1.67 to get your 40% Gross Profit.

Plus, if you had shipping charges that you paid, you should also add them to the 10 or 11.75 before doing the factoring. All costs in getting the goods on your shelf should be included in what you consider "COST".

This would include brokerage fees, storage fees, hauling fees, etc. If you want to truly zero in on cost you would even include TT fees and such. All costs involved in acquiring the goods. Sometimes this can open your eyes and let you see you are not making near what you thought you were.
.

Hi i have just decided to work on this way, the only problem i have is do you include the vat first before you you add your mark up, as everything i buy includes vat

Originally Posted by SCOOBY67

Hi i have just decided to work on this way, the only problem i have is do you include the vat first before you you add your mark up, as everything i buy includes vat

Intresting read.

Guys,

I'm new in this business but not to business generally. One thing that surprises me is how many people are trading without a full grasp of what profit they're actually turning. For me, profit is what it's all about so I'll never make a product decision or agree to a discounted sales value without knowing what my margin is to 2 decimal places (on high value goods, those decimals count!)

I have a spreadsheet which a few people here have asked for and been sent. With it you plug in your cost and sell prices and do the same for your carriage charges and the sheet works out your ebay fees, paypal fees and your profit in terms of decimal markup, percentage GP and actual sterling value.

I find it helpful to re-calculate my margin quickly and see if a deal is viable or not.

If anyone would like a copy, PM me or post your email address here and I'll be glad to send a copy through.

Cheers

Jay

thanks for the spreadsheet jaybone was just what i was after

The basic calculations are:

Markup - Sale price divided by cost price.
Eg - £10/£7.50 = 1.33 (33% markup)

Margin - Profit divided by sale price
Eg £2.50/£10 = 0.25 (25% gross profit)

That is not correct. If you buy for 2.50 and sell for 10 your Gross Profit is 75%.

Of the selling price, 75% was profit. This is how Gross Profit is calculated. It is an accounting term that is arrived at by subtracting total cost of sales from total sales and appears as such on all profit and loss statements, statements of income, etc.

This is all clearly spelled out above, your post is confusing the issue.

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