Using Margin/Markup to Update Prices

Department Pricing Formulas | Enter Cost and Price

When an item is received at a new cost, the item prices in inventory are not automatically updated (unless the previous regular price = $0, as would be the case for a new item). Point of Sale will alert you that the cost has changed, but revising your prices to reflect the new cost is at your discretion.

Since the cost has changed, Point of Sale does recalculate and display new average unit costs and margin/markup values on the item record. You can use the margin/markup values to see at a glance your profit margin on the item and to quickly adjust the prices to maintain your desired margin.

Example:

You have five units on hand with an average unit cost of $5.00 and priced at $10 to deliver a profit margin of 50%. You reorder and receive five additional units on a receiving voucher, costing $6.00 each. Point of Sale alerts you that the cost has changed, but does not automatically update the item price. The new average unit cost ($5.50) and margin/markup are calculated and displayed as shown below.

You have the option to update your price(s) or not. One way to quickly update the price and maintain your profit level is to edit the margin or markup back to their original values on the item record. In the example below, editing the margin back to 50% results in a new regular price of $11.00.

| Old | New | After margin edit
Quantity | 5 | 10 | 10
Unit Cost | 5.00 | 5.50 | 5.50
Regular Price | 10.00 | 10.00 | 11.00
Margin % | 50 | 45 | 50
Markup % | 100 | 82 | 100

Dont forget to print new price tags!

My markup value sometimes changes right after I enter it. Why?

If you use markdown price levels, the price at each level is also recalculated automatically anytime your regular price is changed.

Related Topics

Update prices when receiving items