January 6, 2014
Formula to Calculate Margin
Learn the correct formula to calculate margin and avoid costly mistakes. Discover how using Cost / (1 - Margin) ensures accurate resale pricing.
Just because I see this so often in spreadsheets:
Costs * 1.Margin = Resale
The proper way to apply a margin to your cost is:
Cost / ( 1 - Margin) = Resale
It makes a big difference on the final number:
100 * 1.3 = 130100 / ( 1 - .3) = 142.86
If you do it the first way at some point you are going to be wondering why you are short 7%.