[Solved] Poll (yes/no) Backend Product Final Price w/(vat/tax)

[horus_68]

I proved you that everybody could do that! Profit after VAT or VAT after the Profit, who cares? It gives the same result:
243.90 + 23% (tax/vat)  +  5% (profit)   = 315€     magic?
243.90 +   5% (profit) + 23% (tax/vat)   = 315€     magic?
315 / 1.23 = 256.0975609756098 €
Tax/Vat = 58.90243902439024€

!

True.. the end result its the same. You win.
Or are you so focused on the final price that you don't see whats happening in the middle?
My point was: you can't calculate the VAT and than add your profit as your picture show!

On March 14, 2012, 21:07:15 PM your image shows:
243.90 + 23% = 300 + 5% = 315
So VAT would be 56,097 not 58,90...

Now lets do the math again only with big and clean numbers to be easier:

(Price + 23%) +  5% profit = amount to be paid by costumer
as in: 10 000.00 + 2 300 = 12 300 +  615 = 12 915 final price.

So its 2 300 euros to give to the fiscal authorities and you gain 615 euros! Not bad for a sale!


Now lets see... I wonder if the fiscal authorities feel the same. I think they will prefer this formula:
(Price + 5% profit) +  23% VAT = amount to be paid by costumer
As in: 10 000.00 + 500 = 10 500 +  2 415 = 12 915 final price.

So, same end price but now its 2 415 euros to give to the fiscal authorities and you only gain 500 euros! Not the same, right?

So I see two options: something its lost in translation here... or in the formula!
If I'm wrong accept my apologies!
Else if an auditor comes to visit you it will be interesting to know the results!

[jjk]

Well, as Milbo said above, what you ask for is in the next VM2 release.
...but couldn't resist to reply with a hint on this statement:

we could make that Product Sell and RECOVER the Tax again that we already payed

...you get the sales tax you paid to your supplier of the product back from your tax authority - even if you don't sell your product. It's called "pre-tax deduction" in all EU countries. 

[maxispin]

Now it works with ver 2.03E. See attachment.

Checking generated result.

Final price 10
VAT 23 %

=>  X * 1,23 =10e
=> X = 8,130081300813008

BINGO

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T H A N K    Y O U    M I L B O! 
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[attachment cleanup by admin]

[maxispin]

I proved you that everybody could do that! Profit after VAT or VAT after the Profit, who cares? It gives the same result:
243.90 + 23% (tax/vat)  +  5% (profit)   = 315€     magic?
243.90 +   5% (profit) + 23% (tax/vat)   = 315€     magic?
315 / 1.23 = 256.0975609756098 €
Tax/Vat = 58.90243902439024€

I think you should show your thoughts in a correct way, not using +23%. Much better way is to use  1.23X

Thus,
X = 243.90
Y = 1X * 1.23X * 1.05X
Y = 1.2915X
Y = 1.2915 * 243.90
Y = 314.99685

[jjk]

I'll try to search the "pre-tax deduction" in legislation to see if i can find something about that. Tks!

I suppose you are located in Portugal. So just type "pre-tax deduction" here:
http://translate.google.pt/?hl=pt&tab=TT
You could also look it up in Wikipedia, which usually has links to the complete laws.
The tax regulations are almost identical in all EU-countries. Only the tax rates are different.

[horus_68]

I was talking in english to a portuguese?!! 

And now for something completely different... in portuguese:

Lipes: andas a perder dinheiro com o IVA.
Só os consumidores finais pagam realmente IVA, os comerciantes recolhem e entregam!
O IVA é um imposto rotativo em que fazes os acertos com as finanças (regularmente!) entre aquilo que entregas e o que recolhes.
Existem ainda coisas como imobilizado, perdas, deduções, etc.
- Atenção às faturas pois a percentagem de IVA é sempre adicionada no final ao preço do produto dando assim origem ao TOTAL. A margem de lucro está já colocada dentro do preço do produto (que naturalmente tem de ser superior ao preço de custo!). Até os descontos e promoções, custos de transporte e outras taxas aparecem antes do IVA. Certamente não ignoras que os carros pagam IVA em cima do Imposto de circulação! Assim o IVA é sempre depois de tudo!
Já nos cálculos cuidado com a diferença entre somar coisas e multiplicar coisas. Parece igual mas não é!!

Recomendo que façam uma visita a um contabilista para vos explicar o que andam a fazer de errado no vosso negócio, mas andam mesmo a perder dinheiro!

Bom trabalho!

[baggeler]

The best thing about software is that it allows to implement multiple solutions configurable to match the needs of different users.

It´s comparable to the shopergroup...

While there are some legal constraints (tax is always due on the value including profit) there are definitely more than one aproach in the implementation of pricing into day to day business practice:

The bottom-up aproach is when you start with the product cost and add a formula to get to your final (theoretical) price. This is the aproach practiced in most large shops which usually BUY and RESELL
The top down aproach is a more common business case in smaller businesses, especially (but not only) when there is a product PRODUCED, lets say e.g a pizza, a painting etc..

Both aproaches are valid and there is no reason to limit the ability of a software to serve only one of the two cases.

Just my 5 cents worth..
Bernhard

[apessoa]

I just came across with this thread and I am mesmerized.

The kind of things written here, specially the reasoning for building prices is wrong (I'm being kind and trying not to use stronger terms) for anything but indiferentiated products.
If your store sell indiferentiated products, say OEM computer parts or bulk ore, then yes, cost maybe relevant for the final price calculation, because your business model is based solely in a profit margin of comparable goods. And even then, calculating from a cost standpoint is not productive, because you can have different margins per product and product cost can have a number of variables (bulk promotions, offerings, variable shipping or insurance rates, ...) that require it to be calculated separately, so it's pointless to use it in the backend.

But in every case where you sell diferentiated products, then the price is always what the market wants to pay (the maximum unit price for your projected volume) and cost has nothing to do with it. This is economics 101!

So yes, final price to buyer should be the primary concern and net prices should be calculated (and maybe margins or costs) but not the other way around like it's built right now  and some people here defend "it's the future of pricing". Being able to input the final price and then let VM calculate the net price without tax should be the primary function.


Virtuemart is an online store, not a management tableau. The whole purpose is to make it easy to put products online for promoting an selling, not to use it as your business management tableau de bord - specialized solutions exist for that.

The mixed concepts and misconceptions in this thread are common when you don't have marketing or business oriented people dealing with the business rules, rather relying on the technical team to devise them.

And although are common misconceptions, technical people don't even need to go "outside their world" to understand that. Think about software pricing (not freelancing jobs, which are "indiferentiated"): is the pricing of any software or script based in the amount of working hours paid?
No, never, it's based on how the market values it, which in turn depends on what are the market needs it solves. As simple as that.
Many scripts are sold or leased with a pricing based on the prospected revenue of the customer (that's called "revenue sharing" and yes, thats the model of the XXI century) and cost has nothing to do with it.

I know this is volunteer work and that VM is a big piece of software, but these are the details that are critical for the webmasters and store administrators and in the end make people choose other solutions over VM.

Just my five cents