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4. Calculate Expenses and Profit of Each Product

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Transcript

Now that you’ve found your profit margins, learn more about your business expenses by calculating the out-of-pocket costs, gross sales, and profits.

To the right of the “Margin” column, add 3 more column headings to your spreadsheet for Out-of-Pocket Costs, Gross Sales and Profit.

This number tells you how much you spent to create your entire stock of each item.

Begin typing your formula in cell H2.

Type an equals sign, and then add the cell number for Original Stock.

In this case, B2.

Add an asterisk to indicate multiplication.

Then, input the cell for Total Cost Per Unit.

In this example, it’s E2.

Press Enter.

The result of the formula appears in the cell.

Double check the math...

...then drag the formula to the rest of the column.

Now move on to gross sales.

In cell I2, type an equals sign...

...then multiply the total number of items sold by the retail price.

Press enter, and copy the formula down the rest of the column.

Next, determine your profit.

In an online business, or any company, understanding profitability is critical.

A company can’t stay in business without making a profit.

Profit is gross sales minus out-of-pocket costs.

In cell J2, type an equals sign...

...then subtract costs from sales.

Press enter, and drag to copy the formula down the column.

To make your spreadsheet easier to read as it gets larger and more complex, try freeze cells.

This keeps specific rows or columns from moving as you scroll through your spreadsheet.

Highlight the row containing your column headings, and freeze it.

Now the headings remain visible as you scroll through your spreadsheet.

Next, freeze the column containing your list of product types.

You’ve learned so much about calculating your inventory and expenses.

Consider this data when determining which products are most valuable for your business.

Even if you like an item, if it isn’t profitable, it’s probably not worth selling.

Instructions

  1. Add columns for “Out-of-Pocket Costs,” “Gross Sales,” and “Profit” to your spreadsheet.
  2. Use formulas to calculate each total.
  3. Copy formulas down each column.
  4. And freeze the first row and column in your spreadsheet.