It is a very useful mathematical tool in the retail business. This is the factor by which the purchase price (excl. taxes) of a product is multiplied to obtain its final selling price. It allows the company or the producer to determine the selling price of a product in relation to its tax-exclusive purchase price. For example, if you buy a product for 1€ and sell it to your customers for 2€, you use a multiplier of 2. The selling price obtained includes, in addition to the initial purchase price, the margin expected by the company as well as the VAT.
There are currently 2 formulas for calculating the multiplier:
- Multiplier coefficient = 1 + margin rate
- Multiplier coefficient = recommended selling price/tax-exclusive purchase price.
The multiplier represents a significant selling point for companies and producers. It allows us to propose recommended public sales prices to distributors.