How to calculate a margin of 50

Margin

margin

The term margin is a synonym for the word trading range. A trading margin is the difference between the purchase price and the sales price of a commodity. For example, if you buy goods for 10 euros and resell them for 50 euros, you have earned a margin of 40 euros for the item. However, the following applies: margin is not always profit. Because no profit can be determined only through the sale of goods, since ultimately many other fixed costs in a company reduce sales.

Basics of margins

It is customary to give trade margins or margins traditionally in percent. With an intelligent accounting software, different margins can be calculated carefully. The cost price of a product is the purchase price to which surcharges or discounts have been added. This also includes burdens such as transport costs and customs duties. To simplify the calculation, the purchase price is often used as the basis for the calculation. The calculation of the margin is based on net amounts. The end customer price results as soon as the price is supplemented by VAT. The size of a margin depends heavily on the industry. It is determined by various factors, for example the competitive situation, the price sensitivity of customers and the level of production costs.

The margin must not only cover the purchase price, but be available for all remaining expenses. Different trade margins are traditionally determined in companies in order to meet the various requirements of the market. If the purchase price of a product is higher than its sales price, there is dumping. Companies try to keep their margin as large as possible. If the final price is largely unchangeable due to tough competition, the only way to increase the margin is to lower the purchase price. Alternatively, falling margins can be offset by savings in other areas, such as salaries and energy costs.

Use lexoffice as a practical calculator for trading margins

Modern accounting must meet various requirements. With Lexoffice you benefit from user-friendly and intelligent software that enables you to perform various calculations. With Lexoffice you can calculate the margin of your products in seconds and post the corresponding items in the balance sheet. Lexoffice enables a breakdown into various calculations, for example with gross and net information.

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