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# Profit % in Item Card

Member Posts: 1,149
edited 2007-07-11
Hi Everybody this is certainly a navie question but to which I don't have an answer. Let's say the unit cost of an item (in the item card) is 10. The Price/Profit Calculation type is Price = Cost + Profit while the profit% is 10.

How is it possible that the calculated price is 11.111 or when profit% is changed to 20 it is 12.50?

• Member Posts: 1,283
Hi

Navision works this out from the price, therefore if the selling price is £12.50 and the cost is £10.00 the margin is £2.50. £2.50 is 20% of £12.50 if you see what I mean.
The art of teaching is clarity and the art of learning is to listen
• Member Posts: 184
edited 2007-07-12
Navision is using the correct way for calculating profit/margin. Many people do not see the difference between margin and mark-up.

Example:
cost 200€

margin 20%=> 200 / 0.8 = 250€
mark-up 20% => 200 * 1,2 = 240€

If you have a margin of 20%, it's no problem to give a discount of 18%, because still 2 % margin is left. (Not that I would prefer a discount like this, but just as an example).

Discount of 18% on 250€ => 250 * 0,82 = 205€ (the 5€ profit is 2% of 250€)
Discount of 18% on 240€ => 240 * 0,82 = 196,80€

If you think that you have a margin of 20 %, but do calculate that as a mark-up, then you can not give 18% discount, because you will lose money on this deal. So, margin MUST allways be calculated from point of sales price.

So people be very carefully when you talk about margins, and for sure if you give discounts!!!!!!
Francois
Consultant-Developper

http://www.CreaChain.com
• Member Posts: 5,063
The formula is:
```"Unit Price" := "Unit Cost" / (1 - "Profit %" / 100)
```