calculate margin on cost to retail
The formula for calculating retail margin is the sales price of an item minus COGS, divided by the sales price, multiplied by 100. If you sell an item at $20 and paid $10 to acquire it and sell it, your retail margin is $10 divided by $20, or 50 percent.ou subtract your COGS from your desired sales price in the same way, but then divide that amount by your COGS. If your target price is $20 and your COGS are $10, your markup is $10 divided by $10, or 100 percent. Thus, to achieve a 50 percent margin on an item that costs you $10, you need a 100 percent markup.
This gives you a 70 percent cost-to-retail ratio. For the year, you book $336,000 in net sales. Your cost of goods sold under the retail method is 70 percent of net sales, or $235,200. Your gross profit is $100,800, which is 30 percent of net sales.You can shortcut the calculation of gross profit margin by subtracting your cost-to-retail percentage of 70 percent from 100 percent. While easy enough to calculate, the gross margin number is completely a function of your cost-to-retail ratio.his gives you a 70 percent cost-to-retail ratio. For the year, you book $336,000 in net sales. Your cost of goods sold under the retail method is 70 percent of net sales, or $235,200. Your gross profit is $100,800, which is 30 percent of net sales.