Any help with pricing mark up online?

Jacobjjj

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

InsideInsurance

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

somethingcorporate

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).

chalkie99

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.

somethingcorporate

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.

chalkie99

somethingcorporate wrote: »

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.

somethingcorporate

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

getmore4less

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

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

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

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.