## Marketing Pricing Formulas

Unit cost

unit variable cost (AVC) + total fixed costs

divided by unit sales (AFC)

divided by unit sales (AFC)

Mark up price

unit cost (ATC)

divided by (1 – mark up % on sale)

divided by (1 – mark up % on sale)

Mark up price alt.

unit cost

divided by (1 – desired return on sales)

divided by (1 – desired return on sales)

Mark up % on sale

(marl up price (unknown) – unit cost)

divided by mark up price

divided by mark up price

Mark up % on selling price

mark up % on cost

divided by (100% + mark up % on cost)

divided by (100% + mark up % on cost)

Mark up % on cost

mark up on price

divided by (100% – mark up % on selling price)

divided by (100% – mark up % on selling price)

Breakeven in units

total fixed costs

divided by fixed cost contr. per unit

divided by fixed cost contr. per unit

fixed cost contr. per unit

price – AVC (unit variable cost)

Breakeven in $

breakeven in units (x) selling price

Breakeven in $ alt.

total fixed costs

divided by contribution margin

divided by contribution margin

contribution margin

(price – variable cost)

divided by price

divided by price

desired sales $

(fixed cost + profit goal)

divided by contribution margin

divided by contribution margin

desired sales in unit

fixed costs + profit goal

divided by contribution per unit

divided by contribution per unit

if profit goal is stated as a percent of sale, not dollar amount… the desired sales in units

fixed costs

divided by ((price – variable cost) – (markup % on sales (x) price))

divided by ((price – variable cost) – (markup % on sales (x) price))

markup chain

(suggested retail price – retail margin)

(retailer’s cost/wholesaler’s price) – wholesaler’s margin

(retailer’s cost/wholesaler’s price) – wholesaler’s margin

contribution per unit

(price – variable cost)

net sales

gross sales revenue – returns and allowance

(returns and allowance = trade, cash, quantity, and promotion allowances)

(returns and allowance = trade, cash, quantity, and promotion allowances)

cost of goods sold

sometimes called cost of sales

-actual cost of the merchandise sold by a manufacturer or reseller.

-it includes the cost of inventory, purchases, and other costs associated with making the good

-actual cost of the merchandise sold by a manufacturer or reseller.

-it includes the cost of inventory, purchases, and other costs associated with making the good

gross margin (gross profit)

(net sales – cost of goods sold)

operating expenses

the expenses incurred while doing business

-these include all other expenses beyond the cost of goods sold that are necessary to conduct business

-these include all other expenses beyond the cost of goods sold that are necessary to conduct business

net profit before taxes

profit earned after all costs are deducted

gross margin percentage

gross margin

divided by net sales

divided by net sales

net profit percentage

net profit

divided by net sales

divided by net sales

operating expense percentage

total expenses

divided by net sales

divided by net sales

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