LESSON 15: ACHIEVING YOUR MARGIN

The average mark-up in In-Store Bakery is 40-100 percent.

Calculating Mark-Up 

• Sales price minus unit cost divided by unit cost, multiplied by 100 = mark-up percentage

For example, if your product costs $50 to make and the selling price is $75, then the markup percentage would be 50 percent: ($75 – $50) / $50 = .50 x 100 = 50%.

Total unit cost should include:

• Cost of goods
• Labor
• Packaging/labeling

Calculating Margin 

To find the margin, divide gross profit by the revenue. To make the margin a percentage, multiply the result by 100. The margin is 25%. That means you keep 25% of your total revenue

Department numbers as snapshot

Gross profit can be calculated by subtracting cost from total sales.

• Total Bakery Sales − Cost of Goods Sold = Gross Profit
  Example: $190,000 − $104,500 = $85,500

Gross margin can be calculated by dividing gross profit by total sales.

• Gross Profit ÷ Total Bakery Sales = Gross Margin
  Example: $90,000÷ $190,000 = 0.4736 or 47.3%..

Increasing your mark-up or lowering your costs will increase your margin.