Results 1 to 6 of 6

Math Help - Profit - raising prices

  1. #1
    Newbie
    Joined
    Aug 2010
    Posts
    6

    Profit - raising prices

    Assuming an anticipated profit of 25% profit on the selling price, a 5% price increase would mean how much % of the current sales if the same profit is to be retained?

    I really dont know how to go about this one. Can somebody help?

    Thanks
    Follow Math Help Forum on Facebook and Google+

  2. #2
    Master Of Puppets
    pickslides's Avatar
    Joined
    Sep 2008
    From
    Melbourne
    Posts
    5,234
    Thanks
    27
    Let selling price be x then a 25% profit gives 1.25\times x with a further 5% increase on that would be 1.05\times 1.25\times x .

    Is that what you mean?
    Follow Math Help Forum on Facebook and Google+

  3. #3
    Newbie
    Joined
    Aug 2010
    Posts
    6
    I'm selling a x units of a product for $100 each and my profit is $25 i.e. my cost price is $75. If I increase my selling price by 5% how much % of the current sales needs to be maintained if the same profit is to be retained?

    Thanks
    Follow Math Help Forum on Facebook and Google+

  4. #4
    Newbie
    Joined
    Apr 2009
    Posts
    6
    New selling price = $105, so if you want to maintain the same profit, the total turnover should be $100 again. you only need to sell $100/$105 * a = 0,9523 * a= 95,23...% * a
    Follow Math Help Forum on Facebook and Google+

  5. #5
    Newbie
    Joined
    Aug 2010
    Posts
    6
    A guy told me a 5% increase means the same profit on 83.5% of the current sales. Im unable to figure out how he got 83.5%.
    Follow Math Help Forum on Facebook and Google+

  6. #6
    Newbie
    Joined
    Apr 2009
    Posts
    6
    There is a difference between "absolute profit" and "profit margin". My calculation shows how to maintain the same "profit margin".

    sales quantity 100 100
    price per produc 100 105
    cost per produ 75 75
    total turnover 10.000 10.500
    total costs 7.500 7.500
    total profit 2.500 3.000
    profit margin 25% 29%

    To maintain 2.500 profit, you need to sell 83,3 products.

    absolute_profit = quantity *( price_per_prod - cost_per_prod)

    and therefore

    quantity = absolute_profit / ( price_per_prod - cost_per_prod)
    = 2.500 / (105 - 75)
    = 83,33333
    => 83,333%

    Include the increase %:

    absolute_profit = quantity *( (1 + increase%) * price_per_prod - cost_per_prod)
    quantity = absolute_profit / ( (1 + increase%) * price_per_prod - cost_per_prod)

    So (e.g.) to maintain 2.500 profit
    quantity = 2.500 / ((1 + 0,05) * 100 - 75)
    = 2.500 / ((1,05) * 100 - 75)
    = 2.500 / (105 - 75)
    = 2.500 / 30
    = 2.500 / 30
    = 83,333 => 83,3%
    Follow Math Help Forum on Facebook and Google+

Similar Math Help Forum Discussions

  1. Percentages and prices.
    Posted in the Algebra Forum
    Replies: 1
    Last Post: October 10th 2011, 07:14 AM
  2. Raising Capital
    Posted in the Business Math Forum
    Replies: 8
    Last Post: October 31st 2010, 09:57 AM
  3. nonlinear prices
    Posted in the Algebra Forum
    Replies: 9
    Last Post: August 2nd 2009, 09:44 AM
  4. profit and marginal profit relationship
    Posted in the Business Math Forum
    Replies: 1
    Last Post: January 16th 2009, 08:00 AM
  5. Raising Power of Exp
    Posted in the Algebra Forum
    Replies: 2
    Last Post: October 20th 2008, 11:31 AM

Search Tags


/mathhelpforum @mathhelpforum