Results 1 to 4 of 4

Math Help - A circular problem with resolving a sales price

  1. #1
    Newbie
    Joined
    May 2010
    Posts
    2

    A circular problem with resolving a sales price

    Hi, I am new here but have a maths problem that is causing me to loose my hair lol. I am trying to arrive at a price to sell something on eBay, taking into account the variable costs that eBay and PayPal charges and factoring them into the selling price. However, the selling price also changes too and so it alters the costs. Here is the problem I have:

    Selling price $12
    + Insertion fee $0.50
    + PayPal fixed fee $0.30
    + eBay variable fee $x = 5.25% of a
    + PayPal variable fee $y = 2.4% of b
    = selling price $a
    + postage $8.50
    = total price $b

    Such that:

    b = Insertion fee + PayPal fixed fee + eBay variable fee + PayPal variable fee + postage.

    Note that y affects a, which affects b again, which affects y, which affects a, etc. Likewise x affects a, which affects x again.

    Any help would be greatful. Thanks.
    Follow Math Help Forum on Facebook and Google+

  2. #2
    MHF Contributor
    Joined
    Dec 2007
    From
    Ottawa, Canada
    Posts
    3,170
    Thanks
    72
    Quote Originally Posted by veryConfused View Post
    b = Insertion fee + PayPal fixed fee + eBay variable fee + PayPal variable fee + postage.
    WHY does b not include the selling price (as a does)?

    AND: in your example, are you trying to calculate an "asking price"
    that will result with $12 in "your pocket"??
    Follow Math Help Forum on Facebook and Google+

  3. #3
    MHF Contributor
    Joined
    Dec 2007
    From
    Ottawa, Canada
    Posts
    3,170
    Thanks
    72
    Anyhoo, assuming that $12 is what you will receive, then selling price b = $22.58

    n = net (12)
    f = fixed fees (.80)
    p = postage (8.50)
    u = percentage of a (.0525)
    v = percentage of b (.024)

    FORMULA b = a + p where a = (n + f + vp) / (1 - u - v)

    Code:
    net from sale      12.00            12.00
    fixed fees           .80            12.80
    .0525 of a           .74            13.54
    .024 of b            .54            14.08 : a
    postage             8.50            22.58 : b
    Follow Math Help Forum on Facebook and Google+

  4. #4
    Newbie
    Joined
    May 2010
    Posts
    2
    Quote Originally Posted by Wilmer View Post
    WHY does b not include the selling price (as a does)?

    AND: in your example, are you trying to calculate an "asking price"
    that will result with $12 in "your pocket"??
    Yeah. I bought the shirts for $6 at wholesale price. What I am trying to ensure is that I get a 50% gross profit margin (so selling them at $12 + additional costs incured for selling at that price).

    a is the selling price for the auction on eBay. b is this selling price + the cost of postage and handling.

    Initially I put all the costs like eBay fees, PayPal, etc into the postage and delivery (b-a) but it inflated the postage quite a bit. Even though it is both cheaper for me and the buyer, it doesn't look attractive as a price.

    So I decided to put all the costs into the selling price to see how that looks, but it gets inflated because of the eBay variable costs, which then inflate the PayPal costs, which then go back into the selling price, which inflates that, etc.

    What I am after is a true cost analysis - to see how much it truely costs to sell on eBay. Whether I absorb those costs or pass it on is something I'll look into a bit later. But in the meantime, I really want to try and keep a 50% profit margin because I will be boot strapping the business and relying on cashflow to build it up, market, etc.

    Quote Originally Posted by Wilmer View Post
    Anyhoo, assuming that $12 is what you will receive, then selling price b = $22.58



    n = net (12)

    f = fixed fees (.80)

    p = postage (8.50)

    u = percentage of a (.0525)

    v = percentage of b (.024)



    FORMULA b = a + p where a = (n + f + vp) / (1 - u - v)



    Code:
    net from sale      12.00            12.00
    
    fixed fees           .80            12.80
    
    .0525 of a           .74            13.54
    
    .024 of b            .54            14.08 : a
    
    postage             8.50            22.58 : b
    Oh wow. No wonder why I couldn't figure it out lol. Thanks heaps for that. That helps a lot.
    Follow Math Help Forum on Facebook and Google+

Similar Math Help Forum Discussions

  1. Replies: 0
    Last Post: August 12th 2011, 06:09 PM
  2. Another pulley problem/resolving
    Posted in the Math Topics Forum
    Replies: 1
    Last Post: May 11th 2011, 09:31 AM
  3. Find total sales and individual sales
    Posted in the Business Math Forum
    Replies: 5
    Last Post: April 8th 2011, 04:31 PM
  4. Replies: 8
    Last Post: September 24th 2010, 01:31 PM
  5. Sales Incentive Problem
    Posted in the Statistics Forum
    Replies: 1
    Last Post: May 2nd 2007, 04:43 AM

Search Tags


/mathhelpforum @mathhelpforum