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Reply by Scap

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Posted on Calculating Overhead & Shop Rate

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Scap

131 posts in 809 days


#1 posted 05-07-2019 02:28 AM


Now if I add a profit of 20% to both of those my totals would come out to be:

Bid 1: $345.60 (Profit of $33.60)
Bid 2: $633.60 (Profit of $105.60)

- lblankenship

I can’t help with your base question, but wanted to point out that you’re shorting yourself on profit if you do the markup method.

Instead, calculate the margin you’d like to make.
Take your cost and divide that number by (1-percent profit expressed as a decimal) for actual margin.

Example
20% profit margin on $100 is 100/(1-0.20)= $125.00
36% profit margin on $100 is 100/(0.64)= $156.25

Profit margin is calculated off (sale price minus cost) divided by sale price x 100.
If you’re adding 20% to cost, your margin is 16.67%

Also, the 20% values you listed above don’t jive with the sell price from what I can tell.
20% on $345 should be $69 and $633 would be $126.60


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