This calculator combines two common problems – sometimes you want to calculate your profit margin (or markup) and give the customer a discount at the same time.
The base margin, base markup and base revenue are values before the discount is regarded. The discount is applied to base revenue and results with a discounted revenue. The true margin and true markup fields show your real margin and markup, after the discount has been considered. Let’s have an example scenario:
You buy blue widgets at $60 a piece. Usually, you work with a 40% gross margin, so it gives you a sale price of $100 (remember, margin is a ratio of profit to revenue, while markup is a ratio of profit to cost). This would give you a $40 profit, but a customer wants to make a really big order and you’re willing to lower your price by 20% and sell it for $80. All things considered, your true gross margin is 25%.
As with all our calculators, you may solve for any value – for example, you may start with the profit field and work your way up to find out how much you may pay your supplier (the cost).