Relative cell referencing

Relative cell referencing
Remember in the pricing example above, how you just had to copy the formulas in row 2 and
the remaining values were automatically calculated?
Look again in the formula bar of that screenshot. Although the formula that you copied from
cell G2 was “=F2 * 95%”, the formula in cell G5 reads “=F5 * 95%”. The original reference to
row 2 in the formula has changed to a reference to row 5. This is called relative addressing,
and it’s an important concept.
Relative addressing is what Excel uses by default. This means that when you copy or move a
formula to a new location in a worksheet (or even to another workbook), Excel automatically
adjusts the cell references in the copied formula to be consistent with the original formula. If
the original formula referenced a value five columns to the left and two rows down, then the
copied formula will do the same.
Does this concept make sense? If not, then give it some careful thought, because it’s
important that you understand it.

Absolute cell referencing 


Now we’re going to improve the structure and usability of our pricing model. After all, there’s
no guarantee that your markup will always be 25%- in these tough economic times you may
need to reduce it to remain competitive. And what if the VAT rate changes? Or maybe you
decide to increase the discount to encourage customers to pay promptly?
The following example shows you how to construct the worksheet so that it allows for future
changes in the business.