If you are a profitable person thinking about the percentage profit from the sale of things. I must say that you are on the right track. Because numerical analysis is the starting point for doing business with sustainability. However, figuring out a percentage profit from the sale of money is not an easy and dead answer to the example everyone thinks.
In this article, we will look at what it takes to figure out how to profit from sales. And an example of profit from sales in each industry or in each type of company?
For a retail business, the average gross profit that should be targeting is about 50% on average, such as costing 100 and setting a selling price of 150. However, this figure is highly dependent on a number of business factors. Such as the type of product, the number of competitors, or even the strategy of the company.
One thing I want everyone to understand is that theories and numbers are essential for any business. But businesses don’t have any more rigid rules. In short, we need to look at factors such as competitors, location, and product types. Let me explain further.
But before we get into the discussion on how to calculate the profit percentage take a look at the website australianonlinecasinosites. Let me give you a little space to describe the word ‘profit’ first.
Understand the profit first.
Income minus expenses is equal to profit, this is a fixed formula that everyone must know. Although most businesses have only sales income. But the part that businesses have to worry about is the cost. This initially includes expenses, and product costs but for someone who has been in business for a long time, it includes wages, rents, marketing fees, and even taxes.
Gross Margin – This is the profit received from the revenue minus the cost of the product.
Operating Profit Margin – This is the profit gained by calculating the income minus the cost of the product. And the costs used in sales such as Marketing expenses and business administration expenses Which, of course, will include employee wages.
Net Margin – This is the maximum profit you collect after deducting all expenses, including taxes. Big businesses that say a lot of profit or loss will look at this part of the number. Of course, if there is a lot of net profit, we have to pay a lot of taxes as well.
Most businesses like LeRoi Johnny should have a positive gross profit (no loss), but there may be long-term investments such as leasing that add decorations, investment methods, and building new product lines. This may result in a loss in the beginning, but it will give you a long-term business advantage.
We have described a lot of profit. What I want everyone to understand is that the profit that most sellers say is the Initial profit That may be deducted from only the cost of the product However, in the world of online selling. Calculation of the initial profit that people talk about may also take into account the cost of advertising (ie sales less cost minus the add-on fee).
In conclusion, if asked most sellers, how much profit would be good? In this section, I will talk more about gross profit. But if asking large business owners how much profit is going to be good This section talks about operating profit. But if you ask an accountant how much net profit is going to be good the answer is that less is more so you won’t have to pay taxes, haha.
Factors affecting sales profit
What I want everyone to consider first is the basic profit. Because if we can’t break the problem right here Continuing to do business may not be worth much.
The overall picture of selling profitability is as long as the customer is willing to pay at a high price, We do not need to set it cheaply in order to keep the profit down. All of these factors depend on the difficulty of selling each product. And it also depends on the competitors.
For example, the business of selling pearl milk tea. That might cost more than ten dollars per glass but the stores in the department can still sell at a price of hundreds of dollars per glass. Likewise, the business of selling creams and supplements produces a profit multiple times the cost of the product. However, businesses that can make a lot of profit will have a lot of competitors.
In this section, although not directly competitive. But there must be a lot of investment in marketing to stay competitive. The conclusion is that the initial profit is a lot, but the operating profit is not much.
From my experience Trading businesses have a profit range ranging from double (100% of the cost) to just 10-20% of the cost
Summary of factors affecting gross profitability
New Company and Old Company – In case of selling the same item. Companies that are new to the market and are hitting the market tend to set lower prices, however, unless new companies have a cheaper way of working. Finally, with the mechanism of the economy and doing business Most companies have to adjust their prices to be the same.
Product type – As everyone can see, each product has different profits. As long as the customer continues to pay (Or the brand owner has not ordered the price control) we can sell at any price The problem is, in the online world, people have easy access to information and other products. Making setting too expensive is a bad thing Overall, luxury products tend to be more profitable.
Sales Amount – The simplest example would be a manufacturing plant. Wholesale and Retail Business Overall, a business that sells a lot of things will not be able to set a price for expensive products.
Strategies – Companies have the same strategy. This will affect the pricing and profit. For example, a company with a lot of services might set a higher price, making it more profitable. Or a company that markets more might make it possible to set more prices as well.
If you run a retail business The easiest way is to first explore the market. I mean calling to ask for preliminary prices from factories or distributors. Then call to inquire about the price that current competitors use to sell… or if possible, ask for the price that customers normally buy from. If you can do this, then you don’t need to sit and compare prices with others on the internet.
I understand that many people read this article because they want to calculate the basic profit to set the price. In fact, we can calculate it as a basis for decision But overall, we have to ask our customers and compare with our competitors that our price is reasonable or not.