Formula require to work out selling price based on NOG

[HomeDeliveryDirect]

NOG stands for Nett On Gross and is calculated by dividing cash margin ex VAT by retail sales including VAT. Whereas the standard method of working out retail margin is cash margin divided by retail sales excluding VAT.

NOG example


Retail Sales Price of Product X = £2.00
Less 20% VAT = £1.67
Cost of Product X to retailer = £1.00
So, cash margin = £0.67
And NOG = 33% (£0.67/£2.00)

My question is if I only know the cost price of say £76 and required margin of 20% how do I work out the selling price?

 

[etaf]

Retail Sales Price of Product X = £2.00
Less 20% VAT = £1.67
Cost of Product X to retailer = £1.00
So, cash margin = £0.67
And NOG = 33% (£0.67/£2.00)

My question is if I only know the cost price of say £76 and required margin of 20% how do I work out the selling price?

So cash Margin is 20%
Cost to product to retailer is £76.00
the want 20% margin

76/(100% - 20% )
76/0.8
=95
so thats the price to retailer less VAT
=95*1.2 (assuming 20% vat)
Sales price now = £114

cash margin = (95-76) / 114
NOG = 17%

if i have the understanding anything like correct from what you have said

I hope this is not homework ???
does appear to be -
No point in us doing your homework, as you do need to learn how to do this yourself

 

[HomeDeliveryDirect]

Thanks Wayne,

At 58 I'm a bit old for homework!

Unfortunately, I don't seem to have explained well enough.

The SP would be £1.20 inc VAT if cost is £76 and NOG margin is 20%, however, its not the SP I need to know but how to get an SP from only having the cost price (£76) and required margin (20%).


SP Inc VAT £120
SP ex VAT £100
Cost ex VAT £76
Cash Margin £24
NOG % Margin 20% (Cash Margin/SP inc VAT)


Thanks for your input.

 

[etaf]

Ok, I was looking at the sales margin - NOT the NOG margin
sorry,
Not sure how to work that out yet, having a think,,,,,,,,,,

 

[HomeDeliveryDirect]

Thanks Wayne

 

[igold]

NOG stands for Nett On Gross and is calculated by dividing cash margin ex VAT by retail sales including VAT. Whereas the standard method of working out retail margin is cash margin divided by retail sales excluding VAT.

NOG example


Retail Sales Price of Product X = £2.00
Less 20% VAT = £1.67
Cost of Product X to retailer = £1.00
So, cash margin = £0.67
And NOG = 33% (£0.67/£2.00)

My question is if I only know the cost price of say £76 and required margin of 20% how do I work out the selling price?

Hi,

Here is the correct math to figure out the selling price given the cost and desired margin:


Cost: 1.00
Desired Margin : 33.33%
Multiply Desired Margin by 1.2
33.33% * 1.2 = 40.0%
Divide Cost by Reciprocal of Margin: 100% - 40% = 60%
1.00 / 60% = 1.67


1.67 * 1.2 = 2.00 with VAT

Reversed
Retail Sales Price of Product X = £2.00
Less 20% VAT = £1.67
Cost of Product X to retailer = £1.00
So, cash margin = £0.67
And NOG = 33% (£0.67/£2.00)

For your second example of a .76 cost with a margin of 20%

Cost: .76
Desired Margin : 20%
Multiply Desired Margin by 1.2
20% * 1.2 = 24.0%
Divide Cost by Reciprocal of Margin: 100% - 24% = 76%
.76 / 60% = 1.00


1.00 * 1.2 = 1.20 with VAT

I hope this helps.

igold

 

[igold]

On above post, example, there is a typo. It should be .76/76% not .76/60%.

igold

 

[igold]

And as a formula, with Cell A2 as your cost, and cell B2 as you desired Margin Percent:

=(A2/(1-(B2*1.2)))*1.2

igold

 

[HomeDeliveryDirect]

igold you are a star.

Works perfectly.

Thanks for your help.

And as a formula, with Cell A2 as your cost, and cell B2 as you desired Margin Percent:

=(A2/(1-(B2*1.2)))*1.2

igold

 

[igold]

As a long time Store Manager, I was not going to let this go until I came up with the solution. Thanks for the feedback. I had fun wrestling with this...