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What's An Easy Way To Work Out Profit On Return?

5 Answers

Matthew Porter Profile
Matthew Porter answered
Profit on return can also be called profit margin or return on sales which is the ratio of operating income divided by net sales. To find profit on return you need to know what the operating income is and divide it by the revenue. This calculation would give you the profit on return answer you are seeking. There are other ways to find profit on return depending on how simple you want to be.

For example if you need to figure out how much you need to price a product in order to get the appropriate profit from a sale then you would need to use a different calculation. This calculation would need to include how much profit you would like to make on the sale in order to increase your overall profit on return or income margin.

For this example you need to find out how much the cost is to you for the product you are selling. We will say it is £2.50. You want a 70 per cent profit on that product, so you would need to find out what price to sell the product at to get 70 per cent profit. 70 per cent of £2.50 is £1.75. You would therefore need to sell the product at £4.25 in order to get a profit of £1.75 or 70 percent. If you wanted to get 100 per cent on profit for an item that would be £5.00.

The more you mark up a product the more you will make which will mean your operating income divided by the revenue will show you a larger profit on return. If you do not have the operating income or revenue you will also need to do calculations for those, which are just as simple. You just need to find the right numbers to calculate from your business accounts.
Anonymous Profile
Anonymous answered
Quickest / Most Accurate calculation is to divide the Cost Price by the % Profit that you wish to achieve. For example:

Cost Price = £2.25
% Profit [on return] that you wish to achieve = 70%
Calculation: £2.25/.30 = £7.50 [target sell price]

That's how we do it :)
Anonymous Profile
Anonymous answered
I'm looking for an easy way to work  profit for the food I sell,

if the cost to me was £2.25 and I want a 70% profit  the selling price would be ? I've work with this stuff before, but it was so long ago. What I need most is someone to say put this into your calculator .

2.25 ?(x+-/) ?(what I need)=£ selling price.  Making 70%

any help greatly appreciated
Nouman Umar Profile
Nouman Umar answered
Profit can be calculated by minus all the cost of the business from that profit. Well you can find out the profit on return by using different methodologies. There are some formulas that you can put up for finding the profit on return from the investment you have made in your business. Check this website for complete formula and detail.
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