Hi
I have a problem which is pickling my brain and I'm not sure what phrase I should be Googl'ing for. I have a horrible feeling the answer is obvious and/or there's a standard formula that is applied in this scenario, so at risk of embarrassing myself ...
I sell items online, so buy at X price, sell at Y and have to pay Z in VAT and fees. I want to add a standard percentage profit margin of 5% of the cost price, then add the VAT and fees to get a selling price, but my problem is that both 20% VAT and 15% fees are removed from the total selling price, i.e. the fees are taken from the price including VAT.
If I add 20% VAT to my initial cost+5%, then add 15% fees, the VAT increases proportionately and vice versa. This leaves me with a net profit below the 5% I started with.
This is the best formula I can come up with (which is clearly wrong):
(((cost price) x 1.05) / 0.85) * 1.2
As an example, assuming my cost price is £10, meaning I want to be left with a net value of £10.50, my formula gives me a selling price of £14.82, but after deducting 15% fees and 20% VAT I'm left with £10.13.
Is anybody able to tell me how I handle this double percentage issue, please?
I have a problem which is pickling my brain and I'm not sure what phrase I should be Googl'ing for. I have a horrible feeling the answer is obvious and/or there's a standard formula that is applied in this scenario, so at risk of embarrassing myself ...
I sell items online, so buy at X price, sell at Y and have to pay Z in VAT and fees. I want to add a standard percentage profit margin of 5% of the cost price, then add the VAT and fees to get a selling price, but my problem is that both 20% VAT and 15% fees are removed from the total selling price, i.e. the fees are taken from the price including VAT.
If I add 20% VAT to my initial cost+5%, then add 15% fees, the VAT increases proportionately and vice versa. This leaves me with a net profit below the 5% I started with.
This is the best formula I can come up with (which is clearly wrong):
(((cost price) x 1.05) / 0.85) * 1.2
As an example, assuming my cost price is £10, meaning I want to be left with a net value of £10.50, my formula gives me a selling price of £14.82, but after deducting 15% fees and 20% VAT I'm left with £10.13.
Is anybody able to tell me how I handle this double percentage issue, please?