Here are some formulae to help you check that you have got your pricing right:
VAT
Find your retail price from your sales price
Multiply by 1.15
Eg: 1.19 plus 15% VAT = £1.37
Find your sales price from your retail price
Divide by 1.15
To find out how much VAT there is
Multiply by 0.15
Eg: 1.19 x 0.15 = 0.18
CALCULATING GROSS PROFIT
Sales- cost of sales = gross profit
Remember to take of VAT before doing this calculation
Eg: Double Gin & Tonic retail price= £3.99, cost of goods to make Double Gin & Tonic = £0.89
£3.99 / 1.15 = £3.47 (sales price)
£3.47/£0.89 = £2.58 (gross profit)
CALCULATING GROSS PROFIT/ MARGIN %
CALCULATING AN APPROXIMATE BREAK EVEN FIGURE
Total costs/ gross margin x 100 = approximate break even
Eg: £2.600 total costs, 43% gross margin (taken from profit and loss)
£2,600/ 43 x 100 = £6046.51
