Markup / Gross Profit / How to Price Your Goods

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Jan 2, 2009
I know this is an old post but I signed up just to thank you for this simple, concise and useful tool. The only other thing I would appreciate clarity on is where VAT comes in to the cost/sale prices.

Many of us buy at trade prices, we calculate our landed cost then do you add VAT then markup or add VAT on at the end?

cost + markup + VAT or

cost + VAT + markup?

VAT goes at the end as this is % of the gross pay.
I've spent a day reading into this and have reflected a great deal on this post starting back in 2005. It's a really great set of tools and thanks to everyone who has contributed.

These are my thoughts (lets solve this for everyone's benefit - my house mate is a tax specialist and accountant so maybe we can fish free facts!)

This forum is called WHOLESALE forums. This would imply to me that many buy from wholesalers and are not necessarily wholesalers themselves. (If they are email me and lets do business :D - I digress).

I raise this subject after pondering VAT.

Many will not be VAT registered especially where their market are retails customers. This includes all your typical multi-media, games, books and gadgets.

Wholesaler Cost + Wholesaler Shipping + VAT = Trade Cost

Trade Cost (Includes VAT!!!!!!!!!!) + Landed Fee/Cost + Markup = Sale Price

(May wish to include PayPal/Google Checkout et al fees into landed fee)

Sale Price - Landed Fee/Cost = Gross Profit

Gross Profit - HMRC = Net Profit

VAT is not charged again as it has already been paid. It is rolled on to the customer. If you are VAT-able (registered) you would charge VAT as your Landed Cost would exclude it.
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Also found this related post on VAT.
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