Creating Selling Prices based on the Cost price
To create selling prices in Pastel
- You must choose either the last cost price or the average cost price.
- You must choose either to mark-up on the cost price or the gross profit margin
- You must decide either the exclusive price to calculate the mark-up on the cost price or the gross profit margin or the inclusive price
Mark-up – If you work on mark-up, you will take the cost price of R100.00 and add 50% to the cost price which will give you R150.00.
Gross Profit – If you work with gross profit margin, you will need to subtract the cost price from the selling price and divide the difference by the selling price.
Keep in mind that when you enter the percentage for the mark-up or gross profit, the percentage entered will be the new percentage and not ‘added’ to the previous percentage.
- If the selling price is R150.00
- If the cost price is R100.00
- This totals R 50.00
Difference of R50.00 divided by selling price R150.00 is 0.3333 x100 to convert to a percentage is 33.33%. If the previous mark-up was 20% and you now want it to be 30%, you need to enter 30% and not enter 10% to add to the previous mark-up.
- By selecting Gross Profit Margin, you need to enter 33.33 % to get the new selling price.
- By selecting Mark-up On Cost, you need to enter 50% to get the new selling price.
If you are looking for a 33.33% gross profit margin and you select mark-up on cost and enter 33.33%, you will only make R33.33 on R100.00 instead of R50.00 on the R100.00.