Need Help With Selling Price Calculation for Business

[239984bueglok]

Hi there,

Need help with this profit calculation for business study, it's based as if I was selling stuff on eBay.
So need to calculate the lowest price that one could sell these items at, with making a decent profit margin of 10 cents, whilst keeping a competitive price. I would say on average Item 1 would sell for $5, item 2 for ~$5.15 and item 3 for anywhere from $9 to $11. But disregard these prices if I won't be able to make a profit.


Here is the cost of the items from the wholesaler.


ITEM 1: 0.5usd x113 pieces =56.5usd= 74.6AUD


ITEM 2: 0.54usd x104 pieces =56.4usd=74.5AUD


ITEM 3: 4.39usd x5 pieces=21.95usd=28.9AUD


Shipping cost: 84.8usd =112AUD


Additional costs:


I pay $2 in stamps on each envelope when I post the item to a buyer.


eBay takes 9.9% of the selling price as a fee


PayPal takes 2.6% + $0.30AUD of the selling price as a fee


I paid $37.91 for 200 postage envelopes to send the items in


Selling prices need to be in AUD




Thanks in advance

 

[Deleted member 4993]

Hi there,

Need help with this profit calculation for business study, it's based as if I was selling stuff on eBay.
So need to calculate the lowest price that one could sell these items at, with making a decent profit margin of 10 cents, whilst keeping a competitive price. I would say on average Item 1 would sell for $5, item 2 for ~$5.15 and item 3 for anywhere from $9 to $11. But disregard these prices if I won't be able to make a profit.


Here is the cost of the items from the wholesaler.

ITEM 1: 0.5usd x113 pieces =56.5usd= 74.6AUD
ITEM 2: 0.54usd x104 pieces =56.4usd=74.5AUD
ITEM 3: 4.39usd x5 pieces=21.95usd=28.9AUD
Shipping cost: 84.8usd =112AUD

Additional costs:
I pay $2 in stamps on each envelope when I post the item to a buyer.
eBay takes 9.9% of the selling price as a fee
PayPal takes 2.6% + $0.30AUD of the selling price as a fee
I paid $37.91 for 200 postage envelopes to send the items in
Selling prices need to be in AUD
Thanks in advance

What are your thoughts?

Please share your work with us ...even if you know it is wrong.

If you are stuck at the beginning tell us and we'll start with the definitions.

You need to read the rules of this forum. Please read the post titled "Read before Posting" at the following URL:

http://www.freemathhelp.com/forum/announcement.php?f=33

 

[239984bueglok]

What are your thoughts?

Please share your work with us ...even if you know it is wrong.

If you are stuck at the beginning tell us and we'll start with the definitions.

You need to read the rules of this forum. Please read the post titled "Read before Posting" at the following URL:

http://www.freemathhelp.com/forum/announcement.php?f=33

Sorry, I'm stuck at the beginning. It's the different costs that are confusing me.

 

[stapel]

Sorry, I'm stuck at the beginning. It's the different costs that are confusing me.

How so? Deal with each item separately, at least at first. Do those calculations first.

 

[Ishuda]

Hi there,

Need help with this profit calculation for business study, it's based as if I was selling stuff on eBay.
So need to calculate the lowest price that one could sell these items at, with making a decent profit margin of 10 cents, whilst keeping a competitive price. I would say on average Item 1 would sell for $5, item 2 for ~$5.15 and item 3 for anywhere from $9 to $11. But disregard these prices if I won't be able to make a profit.


Here is the cost of the items from the wholesaler.


ITEM 1: 0.5usd x113 pieces =56.5usd= 74.6AUD


ITEM 2: 0.54usd x104 pieces =56.4usd=74.5AUD


ITEM 3: 4.39usd x5 pieces=21.95usd=28.9AUD


Shipping cost: 84.8usd =112AUD


Additional costs:


I pay $2 in stamps on each envelope when I post the item to a buyer.


eBay takes 9.9% of the selling price as a fee


PayPal takes 2.6% + $0.30AUD of the selling price as a fee


I paid $37.91 for 200 postage envelopes to send the items in


Selling prices need to be in AUD




Thanks in advance

First do a fixed price calculation independent of each item[ that is what costs do not change when selling an item]. For example you have $37.91 [I assume AUD] for 200 postage envelopes which is 0.18955 per envelope [call it 0.19]. Then add the 0.30 fixed PayPal fee. Then .... Call that value F.

Next do the item individual prices. For example, for item 1 the cost is about 0.6671AUD per item [call it 0.67].

We now have the total fixed cost for an item. For example the total fixed cost for item 1 is F+0.67. Call the total fixed cost C_k for the k^th item

Now do the variable cost which is based on selling price S_k for item k. For example the variable cost of selling item k is [0.099 + 0.026] S_k = 0.115 S_k.

You can now compute your gross [NOT YOUR NET] profit GP_k
GP_k = S_k - [C_k + 0.115 S_k]

 

[239984bueglok]

First do a fixed price calculation independent of each item[ that is what costs do not change when selling an item]. For example you have $37.91 [I assume AUD] for 200 postage envelopes which is 0.18955 per envelope [call it 0.19]. Then add the 0.30 fixed PayPal fee. Then .... Call that value F.

Next do the item individual prices. For example, for item 1 the cost is about 0.6671AUD per item [call it 0.67].

We now have the total fixed cost for an item. For example the total fixed cost for item 1 is F+0.67. Call the total fixed cost C_k for the k^th item

Now do the variable cost which is based on selling price S_k for item k. For example the variable cost of selling item k is [0.099 + 0.026] S_k = 0.115 S_k.

You can now compute your gross [NOT YOUR NET] profit GP_k
GP_k = S_k - [C_k + 0.115 S_k]

So if I were selling item 1 at $5, it would be 5-(1.16 + 0.115 x 5) which would equal 3.27? Is that correct?

I just have a question, did I do the variable cost correctly? (0.099 + 0.026) 5 equals me 0.63, was I supposed to use that value? I was confused as to how you got 0.115, because when I entered 0.099+0.026, I get 0.13.

If I do the GPk equation again with 0.63 5-(1.16 + 0.63 x 5) equals me 0.69

 

[Ishuda]

So if I were selling item 1 at $5, it would be 5-(1.16 + 0.115 x 5) which would equal 3.27? Is that correct?

I just have a question, did I do the variable cost correctly? (0.099 + 0.026) 5 equals me 0.63, was I supposed to use that value? I was confused as to how you got 0.115, because when I entered 0.099+0.026, I get 0.13.

If I do the GPk equation again with 0.63 5-(1.16 + 0.63 x 5) equals me 0.69

First I made a mistake in addition: [0.099 + 0.026] S_k = 0.125 S_k not 0.115 S_k. Next, where do you get the TOTAL fixed cost for Item 1 is 1.16. That only accounts for the cost of item 1, the fixed fee for Ebay and the cost of the envelope for mailing. What about the rest of it [the 'Then ...' in the original post]? Make your list [what you listed first plus the other parts such as the individual cost of the item] and check off each part as you include it.

 

[239984bueglok]

First I made a mistake in addition: [0.099 + 0.026] S_k = 0.125 S_k not 0.115 S_k. Next, where do you get the TOTAL fixed cost for Item 1 is 1.16. That only accounts for the cost of item 1, the fixed fee for Ebay and the cost of the envelope for mailing. What about the rest of it [the 'Then ...' in the original post]? Make your list [what you listed first plus the other parts such as the individual cost of the item] and check off each part as you include it.

Ok, so this is for item 1, individually, and then the same formula would apply to the rest of the items, yes?

the only cost left out was the $2 in postage,

So, i re did the calculation for item 1, tell me if i got this right

envelopes $0.19 each
paypal flat fee $0.30
postage stamps $2

so F = 2.49

Ck (individual item cost) 0.67

F + Ck: 2.49+0.67 = 3.16

So lets say I am selling the items for $5

Now for the percentage fees

eBay 9.9%
PayPal 2.6%

so 0.099+0.026 = 0.13

therefore the variable cost is (0.099+0.026)x5 = 0.63

So now the gross profit GPk is 5-(3.16+0.13x5) = 1.19

So if I sold item 1 for $5, I would make $1.19 profit? Is this correct?