Be honest - if I asked you what the resulting margin would be on a 50% markup, how quickly could you answer?
Given how fundamental margins and markups are to any product business, I think it's time we cleared this up once and for all. If you can't be bothered to read this, just grab the "cheat sheet" at the bottom of the article, print it out and keep it in a safe place.
If you've got here because you've worked yourself up into a state of rage because the fancy accounting/ERP/web system you pay all that money for each month has produced an invoice that doesn't match up with an invoice you've been given, or a customer has complained that the totals on an invoice you've produced are incorrect - take a deep, calming breath and know this: there is no single, correct way to calculate VAT.
Well, honestly, they probably just eyeball it. A lot of business owners have been “in the game” so long they can probably just guess at how much to buy.
I ran a company that supplied restaurants and hotels for a good while and can tell you that precisely 0% of our customers were doing anything other than calling us from inside their walk-in cold room with a list scratched on the back of a chopping board directly from memory.
If you managed to get past the title of this post and are still here then this article could potentially be of great help to you. If you’re bemused by the title but have stuck around thinking this might be an entertaining read, leave now – you are horribly mistaken.