marge
Calculating your margin: the costs everyone forgets
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Purchase price and selling price are not enough. What slips between them and eats the profit.
The real cost of a unit
On top of the purchase price come transport, handling fees, packaging and the time spent receiving goods. Spread across the batch, these often represent 5 to 15% of the purchase price.
An item bought at 100 therefore costs 110 before it even reaches the shelf. Reasoning on 100 distorts every decision that follows.
Unsold stock is part of the calculation
If 10% of a batch does not sell, the remaining 90% must carry that loss. A stated 30% margin becomes a real margin of around 20%.
That is why a slow-moving reference can be less profitable than a low-margin one that sells fast.
Rotation, the key indicator
A product at 20% margin sold four times a month earns more than one at 50% sold once. That is the calculation most beginners never make.
Tracking units sold per month per reference is more useful than tracking the stated margin. It is also what tells you what to restock first.
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