Gross Margin % Calculation (with a twist)

[Jay77]

Hi, I need to find a solution to the problem below,

example, we have 2 companies,
Company 1 buys in a product for £35
The sales price of this product is set at £75 for both company 1 and company 2.

The question is what is the formula (to achieve the sales price to company 2) so that both company 1 and 2 achieves the same Margin % when selling to other customers (ie in this case the margin would be 31.7%).

I need a formula due to us having multiple products needing the same margin %.

Any help appreciated.

 

[Stiuart_W]

I don't really understand the question.

It reads as if you are saying company 1 buys the product and sells it to company 2 so what price does Company 1 need to sell to Company 2 so they both have the same margin (%)?
But then you say the selling price is £75 for each so it doesn't make sense.

Please clarify

 

[Jay77]

I don't really understand the question.

It reads as if you are saying company 1 buys the product and sells it to company 2 so what price does Company 1 need to sell to Company 2 so they both have the same margin (%)?
But then you say the selling price is £75 for each so it doesn't make sense.

Please clarify

Hi, sorry the selling price for company 2 to sell on is set at £75, so I need to figure out the formula for both companies to achieve the same gross margin, so in short what is the selling price set at from company 1 to company 2 (the selling price of company 1 would be the cost price to company 2).

 

[Stiuart_W]

Well for your example the equations resolve to Selling Price (1 to 2)/Buying price (2 from 1) = SQRT (75 x 35) = £51.23

In fact if you run the equations then the solution is:-

Sell1 = SQRT (Sell2 x Buy1)

 

[Jay77]

Well for your example the equations resolve to Selling Price (1 to 2)/Buying price (2 from 1) = SQRT (75 x 35) = £51.23

In fact if you run the equations then the solution is:-

Sell1 = SQRT (Sell2 x Buy1)

Fantastic, thanks