Target costing with a Fixed Cost

smtrader86

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HI all !!!! If someone can help would be great

I am a fairly new seller on amazon, i want to apply a Target Costing approach to my product i will source.

I am planning to sell Item X for £9.99, + Amazon Fees(£5.64). How do i calculate Targets cost, to achieved a 25% Margin
 
HI all !!!! If someone can help would be great

I am a fairly new seller on amazon, i want to apply a Target Costing approach to my product i will source.

I am planning to sell Item X for £9.99, + Amazon Fees(£5.64). How do i calculate Targets cost, to achieved a 25% Margin
Unclear about your question. If you already know how much you're selling and the fee. You can figure out what your profit margin is. I don't understand your goal of "achiev[ing] a 25% margin".
 
So does that mean you get 9.99 - 5.64 = 4.35 per item?

Or are you selling for 9.99 + 5.64 =15.63 per item? and you get 9.99 after paying fees?
 
HI all !!!! If someone can help would be great

I am a fairly new seller on amazon, i want to apply a Target Costing approach to my product i will source.

I am planning to sell Item X for £9.99, + Amazon Fees(£5.64). How do i calculate Targets cost, to achieved a 25% Margin
And, further to the two previous posts, what exactly do you want this "margin" to be 25% of?

My interpretation of your post, since you mention a "
target cost", would be that you want to know what you should pay your "source" for the product in order to achieve this 25% "margin".

If that is correct then you should be looking to buy the product yourself for £3.26 (or if you are bulk purchasing you could offer £326.25 per 100 qty to your 'supplier').

For example: you sell it to your customers for £9.99 each. Amazon rob you of £5.64 on each transaction for the privilege of using their "services" leaving you with an income of £4.35 per item. If you want keep 25% of that then you need to buy each item for 0.75 × £4.35 = £3.2625 (delivered).

If that's not what you want to know then you will need to supply much more information and make it clearer exactly what you need help with for anyone to advise further.

EDIT: If you want a 25% margin on your (£9.99) sales price then you will need to source the items for £1.85 each (or £185.25 per 100).
You might be better off trying to sell 'em on eBay first to see whether they fly off your shelves! ??
 
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Target Costing is a process used to find the ideal cost of direct material and labor when making a new product. The basic process involves estimating the retail price, the cost to distributors/sellers, and the selling/advertising/administrative costs in order to come up with a budget for buying supplies and labor that actually go into producing the product.
 
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