Inventory purchase decision worksheet

A = the three cost lines above. Count each cost once. Use a supplier quote; do not assume a resale value.

R excludes tax collected for remittance and refundable deposits. V includes attributable labor (including owner time), trip costs, cleaning, processing fees, and other booking-driven cash costs. Allocate shared costs consistently. Do not deduct the full purchase price or depreciation in V for this cash-payback estimate.

Contribution is money available for fixed costs and investment recovery. It is not net profit.

For each case: annual cash contribution after added fixed costs = (bookings × C) − F. Simple payback in years = A ÷ that annual amount, only if it is positive. If zero or negative, this scenario does not recover the investment.

Use realistic completed bookings after seasonality, downtime, cancellations, and displaced bookings from your existing fleet. This simplified estimate excludes financing, income tax, resale proceeds, and changes over time; it is not a return forecast.

Illustration only, not market data: A = $3,200; R = $260; V = $100; C = $160; F = $600. At 10 / 20 / 30 bookings, annual amounts are $1,000 / $2,600 / $4,200 and simple paybacks are 3.20 / 1.23 / 0.76 years. Timing of actual cash receipts still matters.

Margin and markup use different denominators. On the same defined cost basis: margin = (price − cost) ÷ price; markup = (price − cost) ÷ cost. At $200 cost and $300 price: margin = 33.33%; markup = 50%.

Price for a target margin m = cost ÷ (1 − m), with m below 100%. A $40 cost and 60% margin require $100. Price for a target markup u = cost × (1 + u): 60% markup on $40 gives $64 and a 37.5% margin. Margin is undefined at zero price; markup is undefined at zero cost.