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Formulas: Profit Margin

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  • Formulas: Profit Margin

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

  • #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.
    Please do not U2U (private message) me directly for questions that should be posted to the forum; any such U2Us will be ignored.

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    • #3
      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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      • #4
        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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        • #5
          ill try it thanks

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          • #6
            no luck yet..

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            • #7
              In your example:

              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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              • #8
                now how do i change the margin percentage and have it reflect the revised dollar amount?

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                • #9
                  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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