We're aware that some users are experiencing technical issues which the team are working to resolve. See the Community Noticeboard for more info. Thank you for your patience.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!

Any help with pricing mark up online?

Options
Hi, wonder if anyone can help, im trying to find out if iv got my pricing formula correct!

Its for selling on eBay. I want to make 30% mark up so this is the pricing structure Im using..

Product wholesale price
Plus 20% VAT
Plus 30% mark up
Plus 15% Fees
Plus £2.05 p&p

Can anybody advise me if this is the right way to to do this, we`r about to hit the VAT threshold so want to check

Any advise/tips would be great :beer:

Thanks
«1

Comments

  • Maybe, depending on what you want to achieve and what you are paying fees on.

    Normally it would be...

    (Item Price + P&P) * markup * fees * VAT

    That way you are including the P&P in all the multiples otherwise by adding it at the end you will only retain about £1.40 of it after you pay the fees and the VAT dues
  • If Fees are charged on the final selling price you need to work backwards from the selling price otherwise the 15% you add on will be less than the actual fees paid.

    Let's say for instance you get to a price after VAT & mark-up of £100 and add £15 on for fees (as per your calculations above). If the selling price is £115 your fees are actually £115*15% = £17.25 whereas you only factored in £15 for them - this will come straight out of your profit every time.

    There are a number of ways to set price - once you do come to one from your cost plus method compare it to what the competition are selling - if they are still considerably more expensive then any extra £1 you can add on in price is pure profit. Alternatively, if your price is now uncompetitive you need to lower your profit expectation or look to cut the cost of obtaining the product (or stop selling it entirely).
    Thinking critically since 1996....
  • chalkie99
    chalkie99 Posts: 1,618 Forumite
    Part of the Furniture Combo Breaker
    Your question doesn't quite make sense because if you are just about to hit the VAT threshold then, as soon as you register, you will be claiming back the VAT on the wholesale price paid and adding the VAT onto the total sales price to your customer.

    Not quite sure why you are concerned about a mark up as opposed to a profit margin?

    Eg. Something costing £10 with a 30% mark up would be £13 but your profit is only 23% and if you factor in fees and postage then your margin on sales figures reduces further.
  • chalkie99 wrote: »
    Not quite sure why you are concerned about a mark up as opposed to a profit margin?

    Eg. Something costing £10 with a 30% mark up would be £13 but your profit is only 23% and if you factor in fees and postage then your margin on sales figures reduces further.

    Mark-up and margin are two different ways of setting prices.

    Mark-up is based on cost (plus a %)- whilst profit margin is based on price.

    Both are legitimate ways of setting prices.

    I do agree though that a target profit % is a better way to operate.
    Thinking critically since 1996....
  • chalkie99
    chalkie99 Posts: 1,618 Forumite
    Part of the Furniture Combo Breaker
    Mark-up and margin are two different ways of setting prices.

    Mark-up is based on cost (plus a %)- whilst profit margin is based on price.

    Both are legitimate ways of setting prices.

    I do agree though that a target profit % is a better way to operate.

    I fully understand that thanks. Not so sure the OP does though or the relevance of what they are asking.
  • chalkie99 wrote: »
    I fully understand that thanks. Not so sure the OP does though or the relevance of what they are asking.

    I knew that from your post, it was more for the benefit of the OP :)
    Thinking critically since 1996....
  • getmore4less
    getmore4less Posts: 46,882 Forumite
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    I think I would come at if from a different angle

    do a price unit turnover profile and try to optimise that.

    Free, you sell loads and don't have enough time to process the orders.
    Cheap, just enough to break even and pay for the time to process.
    not so cheap, profit on each item
    More expensive that the compettion you sell hardly any but make a lot on each one.

    There must be a point where the cost to process orders and the pure profit make selling more cheaper not worth bothering.

    Once you have a price work back.
  • terra_ferma
    terra_ferma Posts: 5,484 Forumite
    Don't forget to add 'hidden' costs, such as shrinkage (losses due to INR. faulty items, returns, possible scammers etc). Also a % of overheads and other costs (e.g. printing, phone calls etc).
    Include ebay monthly store fees as well as listing/FVF.
    Personally I use a spreadsheet that does al the calculations I need for pricing, it took a bit of time to set up, but now I just need to keep it up to date when prices/fees change.
  • motorguy
    motorguy Posts: 22,611 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    Jacobjjj wrote: »
    Hi, wonder if anyone can help, im trying to find out if iv got my pricing formula correct!

    Its for selling on eBay. I want to make 30% mark up so this is the pricing structure Im using..

    Product wholesale price
    Plus 20% VAT
    Plus 30% mark up
    Plus 15% Fees
    Plus £2.05 p&p

    Can anybody advise me if this is the right way to to do this, we`r about to hit the VAT threshold so want to check

    Any advise/tips would be great :beer:

    Thanks

    Congratulations on being able to find a product to sell on ebay that you can chose your net markup on.

    Ebay is hugely price driven, so to be able to find a product, add a 30% markup and still be the cheapest or unique is quite an acheivement.
  • Mistral001
    Mistral001 Posts: 5,428 Forumite
    Part of the Furniture 1,000 Posts Name Dropper I've been Money Tipped!
    pgilc1 wrote: »
    Congratulations on being able to find a product to sell on ebay that you can chose your net markup on.

    Ebay is hugely price driven, so to be able to find a product, add a 30% markup and still be the cheapest or unique is quite an acheivement.

    pgilc1

    I doubt if that is a real value, as no ebay seller would be silly enough to publish their markup's on the internet.

    I must say I am amazed at how low the prices are on ebay and how anybody can make a profit on it.
This discussion has been closed.
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 350.9K Banking & Borrowing
  • 253.1K Reduce Debt & Boost Income
  • 453.5K Spending & Discounts
  • 243.9K Work, Benefits & Business
  • 598.7K Mortgages, Homes & Bills
  • 176.9K Life & Family
  • 257.2K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16.1K Discuss & Feedback
  • 37.6K Read-Only Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.