Adding a commission percentage to cost does not preserve the target margin. Commission is based on the selling price.
Try this with your own numbersFormula and worked example
Quote = (itemised delivery costs + allocated overhead) ÷ (1 − margin − commission)
| Input | Example |
|---|---|
| Ingredients cost | 200 |
| Preparation cost | 150 |
| Packaging cost | 50 |
| Fixed overhead allocated to this order | 100 |
| Target margin after commission | 25 % |
| Selling-price commission | 5 % |
| Calculated result | 714.2857 |
Delivery cost 400; allocated overhead 100; commission 35.7143; retained contribution after assigned costs 178.5714.
Choose reliable inputs
Track purchased quantities, usable yield, labour and waste before deciding on a selling price. For this bakery calculation, use recipe sheets, supplier invoices and stock counts and a consistent definition of one order.
- Ingredients: include the portion belonging to this order or reporting period, and record where the value came from.
- Preparation: include the portion belonging to this order or reporting period, and record where the value came from.
- Packaging: include the portion belonging to this order or reporting period, and record where the value came from.
Use the same currency for every money input. Do not mix weekly costs with monthly revenue, or count the same expense in both an itemised cost and allocated overhead.
How should commission change my quote?
Adding a commission percentage to cost does not preserve the target margin. Commission is based on the selling price.
Allocate overhead once; target margin and commission together must be below 100%.
What if this input changes?
If ingredients cost rises by 10%, this example changes by 28.5714 . This shows the effect of one change; it does not predict what will happen.
Open the calculator, save your baseline, then change the input supported by the least reliable estimate in your records. Compare both scenarios before committing to a price or capacity promise.