Find the selling price

[Janmiller]

Hi, may I know how to find the selling price for the following question?

If the cost price of goods is $8, how much do you need to sell to make a 30% profit margin?

Formula:
Profit margin = profit/revenue (%)

 

[tkhunny]

Can you demonstrate the use of that formula?

"Profit Margin" comes in two common varieties:
1) % of Cost Price -- EXAMPLE: Cost = $10.00, Sell = $12.00, Profit Margin = (12-10)/10 = 20%
2) % of Sell Price -- EXAMPLE: Cost = $10.00, Sell = $12.00, Profit Margin = (12-10)/12 = 17%
Does your formula fit into one of these classifications?
Does the answer to your question fit into one of these classifications?

 

[Steven G]

When you sell the item you want to get back what you paid for it plus 30% of what you paid for it.

What you paid for it; $8
30% of what you paid for it; so you want 30% of $8 = .3*$8 = $2.40

So what do you charge for this item?

 

[JayJay]

To me (admittedly with no training in business or economics) profit margin is always calculated on selling price. When based on cost price the term is "mark up". But whatever definitions could be considered, the OP has indicated that they are expected to use selling price (equivalent to revenue).

 

[Janmiller]

When you sell the item you want to get back what you paid for it plus 30% of what you paid for it.

What you paid for it; $8
30% of what you paid for it; so you want 30% of $8 = .3*$8 = $2.40

So what do you charge for this item?

Tried this method... But the given answer is $11.43.

 

[JayJay]

Hi, may I know how to find the selling price for the following question?

If the cost price of goods is $8, how much do you need to sell to make a 30% profit margin?

Formula:
Profit margin = profit/revenue (%)

Use the formula you were given here and ignore posts suggesting otherwise.

Profit margin = profit/revenue (%)
profit = p
profit margin = 30/100
revenue ( = cost price + profit) = 8 + p

Solve for p then selling price = cost price + profit.

 

[tkhunny]

To me (admittedly with no training in business or economics) profit margin is always calculated on selling price. When based on cost price the term is "mark up". But whatever definitions could be considered, the OP has indicated that they are expected to use selling price (equivalent to revenue).

I've never seen a general consensus of definitions. Maybe it's out there, but we'll have to wait for a generation or two to retire, I think..

 

[Janmiller]

Use the formula you were given here and ignore posts suggesting otherwise.

Profit margin = profit/revenue (%)
profit = p
profit margin = 30/100
revenue ( = cost price + profit) = 8 + p

Solve for p then selling price = cost price + profit.

Yup, thanks! Managed to solve it!

 

[tkhunny]

I've never seen a general consensus of definitions. Maybe it's out there, but we'll have to wait for a generation or two to retire, I think..

Margin vs. Markup: Why You Need to Calculate Both

Relatively useful article, written well. Lacking a bit in mathematical notation, but the concepts are pretty clear. I revise then, to an actual accountant, the difference may be clear. To the novice, perhaps not. Thanks to JayJay for making me look harder.