profitability
The difference between staying in business, and going out of business. Many calculate consumer pricing based on a "Mark Up", or multiplication method in which direct costs are multiplied by a factor larger than 1 ( for example: $1,000.00 X 1.4 = $1,400.00 ), and think that a 40% Gross Margin is generated. We contend this actually yields only a 29% Gross Margin. To get a true 40% Gross Margin you have to take direct cost and divide by a factor less than 1 ( for example: ( $1,000.00 / .60 = $1,666.67 ). The engine below accepts direct cost numbers between 1 and 99,000,000, so that you can see how much profit is potentially left on the table.
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