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Thread: Gross Profit Margin Calc with Commission % of Retail included in Cost of Product

  1. #1

    Gross Profit Margin Calc with Commission % of Retail included in Cost of Product

    Hi,
    If I want to use a set gross profit margin percentage, let's say for example 15% then how do I calculate the following:

    Retail price less a 20% commission less the cost of the product = a 15% gross profit margin

    In the example below, I know what the cost of the product is ($10.00) and I know the gross profit margin % I want to make is (15%) and I know what the commission percentage off of retail will be (20%). Gross profit margin percentage = (retail price - total cost (20% off of retail and cost of product)) / retail price

    Cost of the product is $10.00. What do I make the retail price so that after the 20% commission on retail price and the $10.00 cost of the product is taken off, the gross profit margin equals 15% or some other desired gross profit margin percentage?

  2. #2
    Elite Member
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    Quote Originally Posted by sealsseals View Post
    Hi,
    If I want to use a set gross profit margin percentage, let's say for example 15% then how do I calculate the following:

    Retail price less a 20% commission less the cost of the product = a 15% gross profit margin

    In the example below, I know what the cost of the product is ($10.00) and I know the gross profit margin % I want to make is (15%) and I know what the commission percentage off of retail will be (20%). Gross profit margin percentage = (retail price - total cost (20% off of retail and cost of product)) / retail price

    Cost of the product is $10.00. What do I make the retail price so that after the 20% commission on retail price and the $10.00 cost of the product is taken off, the gross profit margin equals 15% or some other desired gross profit margin percentage?
    Start with naming variables to set up equation.

    Let

    The selling price = S

    Commision = C = 0.2 * S

    cost of product = P

    So

    margin 0.15 = ??

    solve for S
    “... mathematics is only the art of saying the same thing in different words” - B. Russell

  3. #3
    Quote Originally Posted by sealsseals View Post
    Hi,
    If I want to use a set gross profit margin percentage, let's say for example 15% then how do I calculate the following:

    Retail price less a 20% commission less the cost of the product = a 15% gross profit margin

    In the example below, I know what the cost of the product is ($10.00) and I know the gross profit margin % I want to make is (15%) and I know what the commission percentage off of retail will be (20%). Gross profit margin percentage = (retail price - total cost (20% off of retail and cost of product)) / retail price

    Cost of the product is $10.00. What do I make the retail price so that after the 20% commission on retail price and the $10.00 cost of the product is taken off, the gross profit margin equals 15% or some other desired gross profit margin percentage?
    Thank you for the reply, unfortunately I don't follow, would you mind expanding on your equation explanation using the numbers in my example so I can see the final result?

  4. #4
    Hi, thank you for the reply, unfortunately I don't follow, would you mind expanding on the equation you suggested using the numbers in my example so I can follow the math?

  5. #5
    Thank you for the reply, I'm not sure I follow your equation, would you mind working the problem so I can follow the math to see what the retail price should be in the example. Remember, you must understand gross profit margin % in the context of this question which is retail price-cost/retail price, for example if the retail price is 15.00 and the cost is 5.00 then the gross profit margin % is 15-5/15=66%, this means that 66% of the retail price is profit, 15*66%=10.00, this is correct because 15 retail minus 5.00 cost equals 10.00, 10.00 is the gross margin profit in dollars (not %).

    I'm trying to figure out how to calculate what the retail price should be to earn 15% gross profit margin when my cost in the above example is the cost of the product AND a 20% commission of the retail price. I will always know the gross profit margin % I want to make, and the cost of the product and the % of commission off retail, I just now need to know how to calculate what the retail price should be. Make sense?

  6. #6
    Elite Member stapel's Avatar
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    Cool

    Quote Originally Posted by sealsseals View Post
    Hi, thank you for the reply, unfortunately I don't follow, would you mind expanding on the equation you suggested using the numbers in my example so I can follow the math?
    I'm sorry but, as you read in the "Read Before Posting" announcement for this forum, this isn't one of those sites that gives out the answers. Instead, we help students learn how to find the answers themselves.

    So please reply with a clear listing of your efforts so far, so we can "see" where you're getting stuck. (Or, if you're totally lost and need to start with "how do I work with percentages?", please specify such.) Thank you!

  7. #7
    Senior Member
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    Stapel

    I am not sure that this is a student asking for homework help.

  8. #8
    Elite Member stapel's Avatar
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    Cool

    Quote Originally Posted by JeffM View Post
    Stapel

    I am not sure that this is a student asking for homework help.
    We've been caught out in the past by assuming (or trusting the assurances) that the original poster wasn't a student, so we don't want to give out the answers. If this is an adult doing this for "real life", then s/he would probably benefit from learning how to work with basic percentages anyway. And if the poster really doesn't care about the "how" and just wants a finished product, well, there are other websites that perform that service.

  9. #9
    Elite Member mmm4444bot's Avatar
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    Quote Originally Posted by sealsseals View Post
    Thank you for the reply, unfortunately I don't follow, would you mind expanding on your equation explanation …

    Quote Originally Posted by sealsseals View Post
    Hi, thank you for the reply, unfortunately I don't follow, would you mind expanding on the equation you suggested …

    Quote Originally Posted by sealsseals View Post
    Thank you for the reply, I'm not sure I follow your equation, would you mind working the problem so I can follow the math …
    It seems as though you did not pay attention, when reading the forum guidelines.

    Please do not create duplicate posts; there's no reason to do that.
    "English is the most ambiguous language in the world." ~ Yours Truly, 1969

  10. #10
    Quote Originally Posted by mmm4444bot View Post
    It seems as though you did not pay attention, when reading the forum guidelines.

    Please do not create duplicate posts; there's no reason to do that.
    Hi, I'm not a student, I was stuck with nowhere to go to try and solve this problem.

    Regarding the duplicate post, I could not see my reply originally so I replied again, sorry.

    Since the last post, I was able to solve the problem, my apologies again for disrupting the forum.

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