Calculating Gross Profit. - Community Clubs Victoria
Categories

Calculating Gross Profit.

You are here:
< All Topics

[fusion_builder_container hundred_percent=”no” equal_height_columns=”no” menu_anchor=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” class=”” id=”” background_color=”” background_image=”” background_position=”center center” background_repeat=”no-repeat” fade=”no” background_parallax=”none” parallax_speed=”0.3″ video_mp4=”” video_webm=”” video_ogv=”” video_url=”” video_aspect_ratio=”16:9″ video_loop=”yes” video_mute=”yes” overlay_color=”” video_preview_image=”” border_color=”” border_style=”solid” padding_top=”” padding_bottom=”” padding_left=”” padding_right=”” type=”legacy”][fusion_builder_row][fusion_builder_column type=”1_1″ layout=”1_1″ background_position=”left top” background_color=”” border_color=”” border_style=”solid” border_position=”all” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding_top=”” padding_right=”” padding_bottom=”” padding_left=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” center_content=”no” last=”true” min_height=”” hover_type=”none” link=”” border_sizes_top=”” border_sizes_bottom=”” border_sizes_left=”” border_sizes_right=”” first=”true”][fusion_text columns=”” column_min_width=”” column_spacing=”” rule_style=”default” rule_size=”” rule_color=”” content_alignment_medium=”” content_alignment_small=”” content_alignment=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” sticky_display=”normal,sticky” class=”” id=”” font_size=”” fusion_font_family_text_font=”” fusion_font_variant_text_font=”” line_height=”” letter_spacing=”” text_color=”” animation_type=”” animation_direction=”left” animation_speed=”0.3″ animation_offset=””]

Reviewing your profit margins regularly is good practice.   Clubs need to be mindful of products pross profit (GP) margins and can utilise the following formula to calculate the GP percentages:

Gross Profit Margin = (Retail price – Cost price ) X 100%

 Retail price

For example, when selling a packet of potato chips that has a cost price of $1.00 and a retail price of $1.80

$1.80 – $1.00  x 100% = 44%

 If you need to achieve a minimum Gross Profit margin of say 44% you cannot do this by simply multiplying the cost price by 44% and adding this to the cost price.  This is a common mistake and using the example below would give an incorrect result.

$1.00 + 44% = $1.44

Using the correct GP calculation we can see that this only represents a Gross Profit Margin of 30.5%

$1.44 – $1.00  x 100% = 30.5%

[/fusion_text][/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]

Previous Board Skills Assessment Matrix
Next Compliance Inspections
Table of Contents