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I need a formula to calculate profit magin, can anyone help?

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2. Welcome to the Forum!

Can you give a few more details about what you want? Or what data you have to start with? In its simplest form, if c is cost and p is profit then c+p is revenue and the profit margin is p/(c+p), markup is p/c.

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Profit Margin Percentage = (Sell Price - Cost Price) / Sell Price.

Watch that Sell Price <> 0 in your formula or you&#039;ll get an error.

=IF(Sell<>0, (Sell-Cost)/Sell, 0) should work.

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Im estimating material cost and labor. At the base of the form there is a box for magin that is adjusted. I can calculate markup with a simple formula but margin becomes a circular reference.

I.E. Cost + Profit, what percentage of the sum total represents margin and that margin amount can be adjusted. The margin calculation I use now just adds a profit to the sub-total but does not reflect the overall margin for the job.

Sub-Total \$33,985
TOTAL COST \$33,985
MARGIN 35% \$11,894.75
TOTAL SALE \$45,880

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Cost = \$33,985

Markup (not margin) = 35%

So Sell = Cost * 1.35 = \$45,879.75

Total Margin = (Sell - Cost) / Sell = 25.9%

You should not have a circular reference since the markup and margin are 2 different numbers.

....Ralph

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now how do i change the margin percentage and have it reflect the revised dollar amount?

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I&#039;m not 100% sure I understand what you are trying to do. . . so I&#039;ll put down a few formulas to see if I&#039;m close.

1. If you know what the total cost is (say \$3,000) and you want to have a variable markup percentage that you can change (start with 35% like your example), then you need the formula for calculating the selling price. That would be Sell = Cost * (1 + markup) or Sell = 3000 * (1 + .35). Sell would calculate to \$4,050.

2. If you also need to calculate your Profit Margin on the transaction, then use the second formula. Margin = (Sell - Cost) / Sell. This would be (4050 - 3000)/4050 = .2593 or 25.93%

3. If you want to make the Profit Margin a variable and calculate a new Selling Price then (using the numbers from #2 above) Sell = Cost / (1 - Profit Margin) or Sell = 3000 / (1 - .2593) = 3000 / 0.7407 = \$4,050

If you want a 35% Profit Margin it would equal a selling price of 3000 / (1 - .35) = \$4,615 . . . . 35% Profit Margin and 35% Markup are not the same thing.

Hope I got close to what you need... . . . Ralph

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