Cost recovery basis

[Caly]

Hi I have to provide pricing that will bake in any cost impacts either up or down. For instance if my cost increased since last year and my margin was 57% but today it is 55%, I need to bake in the lost margin into a new price. How do I do that in excel?

would this be correct
=55% - 57% is a -2%
To recover that in a new price would it be the new price*(1-abs(-2%)

 

[Caly]

Thank you. I’m curious because the goal is to just recover the lost margin and not to retain the same margin but rather to just recover the difference of the loss.

so for example if the old margin was 57% and today’s margin is 55% am I correct to just take 57% - 55% and then take my price and do this =old price * 1+abs(new margin minus old margin)

or instead should I do this
=old price * (1+abs(new margin minus old margin)/old margin))

 

[Caly]

Thank you. I’m curious because the goal is to just recover the lost margin and not to retain the same margin but rather to just recover the difference of the loss.

so for example if the old margin was 57% and today’s margin is 55% am I correct to just take 57% - 55% and then take my price and do this =old price * 1+abs(new margin minus old margin)

or instead should I do this
=old price * (1+abs(new margin minus old margin)/old margin))

Hi to explain better this is what I’m needing help with. To factor in cost recovery I have the old margin and the new margin. Do I take the new margin minus the old margin to use that for the lost margin to include in the price or instead do I take the new margin minus old margin divided by new margin. The second way gives a higher number than the first way but since it’s a percent already isn’t it just the new margin minus the old margin??? So like if the new margin is 43.21% and old was 46.37% that’s a -3.16% to put back into the price. But if I do =(new margin 43.21% - old margin 46.37%)/new margin 43.21% that equals -7.31%. But which is the right way to do it? My guess is the first way of new minus old margin but I’m not sure.
The price to base this on is $177.14
Using new margin minus old margin is -3.16%
result would be to do =round(177.14*(1+abs(-3.16%)),2) which is $182.74

Or using this of new margin-old margin divided by new margin comes to 190.10
=round(177.14*(1+abs(-7.31%)),2) which is $190.10

which is the right way?