Talk:Gross margin/Archives/2012

Would someone

Would someone please post the formula to calculate item cost when margin and selling price is known?

direct contact: hangingshards@cox.net

Hangingshards (talk) 23:07, 27 August 2008 (UTC)hangingshards

Hi, can someone also add why gross margin % is an important number to look at and how it is used in various models.

Thank you —Preceding unsigned comment added by 70.96.100.58 (talk) 21:04, 30 December 2009 (UTC)

Whats a good profit margin?

Whats a good profit margin?

Hello all,

What is the difference between this margin calculation and the cost-plus cal ?

Best regards,

JJD

This page is ugly. Why can't it just use plain text calculations or tables instead of those gaudy big letters?--Jd147703 17:50, 21 July 2006 (UTC)

Why are margins generally so high in the UK?

Gross Margin defenition can be perplexed according to our needs.

For example

My sales value is 10.05 Lakhs and Profit earned is 3.5 Lakhs, as per Gross Margin it shows my profit percentage as 35%.

By fact I am buying this item for 7 Lakh and selling for 10.05 Lakhs which give me 50% gross margin.

Can some one help me to resolve this problem.

Is Gross Margin concept a fake?

--- Hello. The Gross Margin concept is a very widely used ratio designed to show businesses how profitable each activity/retail line is , without distortion from fixed cost allocations such as head office, staff, etc. It is not a "fake", but I think your maths may be a little off!

Your sales value is 10.05 and you say you buy the item for 7, this leaves you with a gross profit of 3.05. Your gross margin is thus 3.05/10.05 = 30.3% I have no idea how you think your profit is 3.5, but I hope this helps! -adamski

@above

I think he made a mistake in the calculations however, that is primarily because he is still considering markups and not margins Typically, if you buy something for 7 and sell it for 10.5, you have sold it at 50% of the CP, is that correct? now why do you want to introduce a term called gross margin and show lower profits?

If a trader A picks up an item from X for 10 and sells it for 15 to B, would you say he is making 50% profit or (5/15)*100 = 33% profit?

I would say he makes 50% profit because all he is doing is moving the goods from X to B.

If you are trying to call it as "that his biz has added 33% value to the final cost of the item" then I really think you need to understand that if the item costs 10 at the factory X, just because B paid 15 for it, does not mean B sees a 33% value added by A. B sees A making a 50% gain by selling the item.

And by the way, the logical step in a grey transaction is to pull up the margin to show expenditure

Are you going to say that the end of the year that I made 33% profit and from the revenue of 15 deduct 33% or are you going to say I made 5 profit?

Obviously all deals do not go at the same value, so you have to show raw numbers of SP-CP at the end of it.

Categorising

I think the page should be categorized under Finance Ratios. Seeing as no-one else has categorized it, I will put it in that category- if you feel it unsuitable, change it and discuss here. —The preceding unsigned comment was added by 82.37.136.179 (talk) 23:40, 2 February 2007 (UTC).

Carpenter

Bla Bla Bla what is the simple calculation for finding your margin? If i know my sale price and i know my cost for the job what is the margin?

gross margin=cost of sales/sale price The point is :the definition of the "cost of sales" is quite different.

research and dev costs?

Are Rnd costs considered part of cost of goods sold?~

Yeah... If you're a fool.

Gross Margin As An Aspect of Incentivising A General Manager

How would one calculate an bonus / incentive scheme in relation to a Gross Margin? I presume you are looking to have the gross margin as a high positive figure?! Or am I barking up the wrong tree?

---

Hello. One would not often use Gross Margin to incentise a General Manager. By definition this figure excludes many of the costs of doing business such as staff, admin, R&D, head office costs, etc. If you think of Gross Margin as Selling Price/Price paid to supplier, you can see that it may be a good way of incentivising a buyer (in order to incentivise them minimising the price paid to suppliers) or alternatively a store/department manager (who might have some responsibility for pricing and sales as well as cost of goods).

Incentivising a General Manager might be better achieved on the basis of EBIT (i.e. Operating Profit) or via share options (i.e. the higher the share price at the end of the year, the more you earn.) I am sure wiki has detailed articles on these things in its own right. -adamski —Preceding unsigned comment added by 212.140.240.2 (talk) 16:09, 1 November 2007 (UTC)