I had spent 17 years working in wholesale, 12 of those was dealing with wholesale pricing and finding my cost from MSRP provided by the supplier using multipliers. Based on those multipliers and seeing my cost as an example, I always knew that the markup was usually double what the customer paid to buy the item, but I never really understood how to find that markup from their perspective. I feel like you did a pretty good job explaining this in simple enough terms that even I could follow 🤣 Thank you for this!
Glad it was helpful. Resale can be tricky if you don't run your numbers. Especially if you are locked at a price and your expenses wash out any profit you might make. - Tammy
Hey Tammy! Struggling here trying to understand this concept. How do I determine "Purchase Price" without figuring out my MarkUp price/%? First. Because doesn't MarkUp determine your Purchase Price??? If not, then aren't you just making up a "Purchase Price" out of thin air! Say, if a shirt (Costs) to make is $20, I'm not just going to "price it" at $100 on my online store. Won't make sense. No one will buy a shirt for $100 unless there is some type of utilities or incentive attached to it LOL! Sorry for the long Question. Need more clarity on this ahaha!!!
LOL. No problem at all. It is different for all folks. Most kind of work it backward. The key is using the information you have to not "blindly guess" a price, but start with an "educated guess". Let's say your costs are $20. And after running all your numbers, you want to keep your gross margin (sales - costs) at say 55%. That means your costs will run around 45% (100% - 55%). You can then take $20 and divide it by the 45% or .45 and your sales price would need to be $44.44 (or say $45). Keep in mind Sales - COGS - Expenses = Profits. So your Sales price would now be $45 - costs of $20 leaves you the $25 to pay expenses and profit. If your expenses run around 20% then we know you need to have $9 set aside for expenses ($45 x 20% = $9). Now our formula looks like this: $45 - $20 - $9 = $16 for profit. Now, could you price the shirt at $40? Yes but your profits will drop and your COGS % and expense % will both go up since the dollar amount will stay the same but they are a bigger percent of the sale. - Hope this helps! (and makes sense...lol) Tammy
Just today, I got to know the real definition of Margin and what I was doing in my business for the past 3 years is marking up without distinguishable understanding between mark up and margin. you have answered all my questions by this video Thanks a lot
What is Your Biggest Challenge in Your Business When Marking Up Your Products or Services? - Tammy
I had spent 17 years working in wholesale, 12 of those was dealing with wholesale pricing and finding my cost from MSRP provided by the supplier using multipliers. Based on those multipliers and seeing my cost as an example, I always knew that the markup was usually double what the customer paid to buy the item, but I never really understood how to find that markup from their perspective. I feel like you did a pretty good job explaining this in simple enough terms that even I could follow 🤣 Thank you for this!
Glad it was helpful. Resale can be tricky if you don't run your numbers. Especially if you are locked at a price and your expenses wash out any profit you might make. - Tammy
Do you have a contact. I really need help with my store
Hey Tammy! Struggling here trying to understand this concept.
How do I determine "Purchase Price" without figuring out my MarkUp price/%? First. Because doesn't MarkUp determine your Purchase Price??? If not, then aren't you just making up a "Purchase Price" out of thin air! Say, if a shirt (Costs) to make is $20, I'm not just going to "price it" at $100 on my online store. Won't make sense. No one will buy a shirt for $100 unless there is some type of utilities or incentive attached to it LOL! Sorry for the long Question. Need more clarity on this ahaha!!!
LOL. No problem at all. It is different for all folks. Most kind of work it backward. The key is using the information you have to not "blindly guess" a price, but start with an "educated guess". Let's say your costs are $20. And after running all your numbers, you want to keep your gross margin (sales - costs) at say 55%. That means your costs will run around 45% (100% - 55%). You can then take $20 and divide it by the 45% or .45 and your sales price would need to be $44.44 (or say $45). Keep in mind Sales - COGS - Expenses = Profits. So your Sales price would now be $45 - costs of $20 leaves you the $25 to pay expenses and profit. If your expenses run around 20% then we know you need to have $9 set aside for expenses ($45 x 20% = $9). Now our formula looks like this: $45 - $20 - $9 = $16 for profit. Now, could you price the shirt at $40? Yes but your profits will drop and your COGS % and expense % will both go up since the dollar amount will stay the same but they are a bigger percent of the sale. - Hope this helps! (and makes sense...lol) Tammy
@@BadassBusinessOwners Woow!!! Thank You! so much for this info! 🙏 really appreciate it. 😁
@@willogaz9606 Glad it helped!
Soooo Good!!! Absolutely, Love your content!!!
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Glad you find it helpful! - Tammy
Just today, I got to know the real definition of Margin and what I was doing in my business for the past 3 years is marking up without distinguishable understanding between mark up and margin. you have answered all my questions by this video Thanks a lot
Glad it helped!! 😃 Tammy