| I also used to work for Erik's (dinkytown location). That was the gross margin on bikes, which I'm pretty sure means (sale price - purchase price)/(purchase price). Correct me if I'm wrong about the formula. Not included in this is 36% number is the shops cost in selling the bike, which includes, * Assembling the bike (unpacking, assembling, getting rid of packing materials, which are substantial). * Tuning and Selling the bike. * Post sale service. At least for Erik's, a big part of the post sale service was to get people back into the shop and try to sell them accessories. I don't mean un-necessary parts or work, but things like clothes, bike computers, etc.. For many shops I suspect there is not much profit per bike left after these other expenses. Erik's stream-lined much of this process, for example most bikes were assembled at the central warehouse by a dedicated crew. |
You may be thinking of markup, which is the profit dollars as percentage of cost, and is often used in retail.
A 100% markup results in a 50% gross margin.