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#1
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How can I calculate selling price from cost and GP?
We have a pub, and we really need to keep a close watch on profit margins. I
have a formula for calculating the GP from nett cost and selling prices [ which is 1-(cost price/sales price) ] but my maths lessons are nearly 50 years back, and I can't work out how to calculate the price we need to charge in order to make the right margins. A younger memory will solve this in seconds, I know, so please lend a hand. |
#2
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How can I calculate selling price from cost and GP?
Rearranging GP = 1-(cost price/selling price) gives
selling price = cost price /(1- GP) The word 'maths' suggests UK - I got my 'O' level math in 1954! So please check this with some data I wonder if I ever visited your Tilbury pub best wishes from Canada -- Bernard V Liengme Microsoft Excel MVP http://people.stfx.ca/bliengme remove caps from email "Tilburyboozer" wrote in message ... We have a pub, and we really need to keep a close watch on profit margins. I have a formula for calculating the GP from nett cost and selling prices [ which is 1-(cost price/sales price) ] but my maths lessons are nearly 50 years back, and I can't work out how to calculate the price we need to charge in order to make the right margins. A younger memory will solve this in seconds, I know, so please lend a hand. |
#3
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How can I calculate selling price from cost and GP?
"Tilburyboozer" wrote in message
... We have a pub, and we really need to keep a close watch on profit margins. I have a formula for calculating the GP from nett cost and selling prices [ which is 1-(cost price/sales price) ] but my maths lessons are nearly 50 years back, and I can't work out how to calculate the price we need to charge in order to make the right margins. A younger memory will solve this in seconds, I know, so please lend a hand. Not sure where you have got this formula from as a recently retired Management Accountant it makes no sense at all! The formula you need is a re-arrangement of this: GP=SP-COS. In other words what you want to calculate SP is SP = GP + COS where GP=Gross Profit, SP= Selling Price and COS= Cost Of Sales. COS is usually the direct cost to you of your goods for sale, but may contain other items such as direct labour (bar staff etc etc) HTH |
#4
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How can I calculate selling price from cost and GP?
"Bernard Liengme" wrote in message
... Rearranging GP = 1-(cost price/selling price) gives selling price = cost price /(1- GP) I don't know where the OP got this from. As a recently retired Management Accountant I have NEVER seen it expressed that way and in fact have considerable doubts that it would give the correct answer! the proper way is this: GP = SP - COS (Cost of Sales) No division there anywhere! |
#5
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How can I calculate selling price from cost and GP?
Hi
I believe what the OP is referring to Gross Price not Gross Profit. He wants to know how to calculate the Sale price he needs to achieve a given level of Gross Profit percentage. The formula that Bernard gave him is correct, but GP in the formula must be expressed as a percentage figure. With the level of Gross Profit expressed as a % in cell A1, e.g 45% Enter the title for the Product in A2 downward e.g. Bitter, Lager, Gin, Whisky etc Cost price for each Product in B2 downward, then enter in C2 =B2/(1-$A$1) and copy down as far as required. Column C will give the Gross Price he needs to sell each product for, in order to achieve the Percentage as expressed in cell A1 -- Regards Roger Govier "Gordon" wrote in message ... "Bernard Liengme" wrote in message ... Rearranging GP = 1-(cost price/selling price) gives selling price = cost price /(1- GP) I don't know where the OP got this from. As a recently retired Management Accountant I have NEVER seen it expressed that way and in fact have considerable doubts that it would give the correct answer! the proper way is this: GP = SP - COS (Cost of Sales) No division there anywhere! |
#6
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How can I calculate selling price from cost and GP?
His formula amounts to (Sell price - Cost price)/Sell price
So it is the percentage of the Selling price that is profit, I would think But then I'm a chemist best wishes -- Bernard V Liengme Microsoft Excel MVP http://people.stfx.ca/bliengme remove caps from email "Gordon" wrote in message ... "Bernard Liengme" wrote in message ... Rearranging GP = 1-(cost price/selling price) gives selling price = cost price /(1- GP) I don't know where the OP got this from. As a recently retired Management Accountant I have NEVER seen it expressed that way and in fact have considerable doubts that it would give the correct answer! the proper way is this: GP = SP - COS (Cost of Sales) No division there anywhere! |
#7
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How can I calculate selling price from cost and GP?
"Bernard Liengme" wrote in message
... His formula amounts to (Sell price - Cost price)/Sell price So it is the percentage of the Selling price that is profit, I would think But then I'm a chemist best wishes The OP didn't mention GP PERCENT......... |
#8
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How can I calculate selling price from cost and GP?
Well, only the OP can answer what he really wanted.
But, from all the pub landlords I know, they all %GP being the % margin on Sales. What the OP asked for, was how can he calculate his selling price, from his cost and GP. In those circumstances, I believe the interpretation I made is correct - but who knows!!! -- Regards Roger Govier "Gordon" wrote in message ... "Bernard Liengme" wrote in message ... His formula amounts to (Sell price - Cost price)/Sell price So it is the percentage of the Selling price that is profit, I would think But then I'm a chemist best wishes The OP didn't mention GP PERCENT......... |
#9
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How can I calculate selling price from cost and GP?
"Roger Govier" <roger@technology4unospamdotcodotuk wrote in message
... Well, only the OP can answer what he really wanted. But, from all the pub landlords I know, they all %GP being the % margin on Sales. What the OP asked for, was how can he calculate his selling price, from his cost and GP. In those circumstances, I believe the interpretation I made is correct - but who knows!!! The point being, that if the OP uses SP = GP + CP, then he KNOWS how the three inter-relate in an accounting scenario, which is what he's in. The 1-(GP/CP), although it may produce the correct answer is NOT an accounting function, it's an arithmetical function.... |
#10
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How can I calculate selling price from cost and GP?
I am going to give up on this futile argument (as Accountants are always
right, aren't they<bg), but since when has SP = GP + CP not been an arithmetical function? All accounting is based on arithmetical functions. -- Regards Roger Govier "Gordon" wrote in message ... "Roger Govier" <roger@technology4unospamdotcodotuk wrote in message ... Well, only the OP can answer what he really wanted. But, from all the pub landlords I know, they all %GP being the % margin on Sales. What the OP asked for, was how can he calculate his selling price, from his cost and GP. In those circumstances, I believe the interpretation I made is correct - but who knows!!! The point being, that if the OP uses SP = GP + CP, then he KNOWS how the three inter-relate in an accounting scenario, which is what he's in. The 1-(GP/CP), although it may produce the correct answer is NOT an accounting function, it's an arithmetical function.... |
#11
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How can I calculate selling price from cost and GP?
No and it you asked him for "a pint" he would serve you beer without you
mentioning it! Look at his equation - it obviously a ratio calculation. -- Bernard V Liengme Microsoft Excel MVP http://people.stfx.ca/bliengme remove caps from email "Gordon" wrote in message ... "Bernard Liengme" wrote in message ... His formula amounts to (Sell price - Cost price)/Sell price So it is the percentage of the Selling price that is profit, I would think But then I'm a chemist best wishes The OP didn't mention GP PERCENT......... |
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