Raise prices 1%, increase sales 1% and cut costs 1%, by what percentage will
If I could get some help with this -
If you raise prices 1%, increase sales 1% and cut costs 1%, by what percentage will profits increase?
I would like the formula that proves the correct answer so I can understand how it works.
Thanks!
Re: Raise prices 1%, increase sales 1% and cut costs 1%, by what percentage will
You probably should define a base.
Unit Price = Unit Cost + Unit Margin
Total Profits = Total Sales - Total Costs
Re: Raise prices 1%, increase sales 1% and cut costs 1%, by what percentage will
Lets say the Unit Cost is $1.00 and sells at $2.00.
Total sales = $100.00 and Cost = $50.00
Profit = $50.00
So from here - If you raise prices 1%, increase sales 1% and cut costs 1%, by what percentage will profits increase?
Re: Raise prices 1%, increase sales 1% and cut costs 1%, by what percentage will
Do you know how to do percentage calculations?
Is "increase sales" referring to sales value ($) or sales volume (units)?
Re: Raise prices 1%, increase sales 1% and cut costs 1%, by what percentage will
Quote:
Originally Posted by
ronb
Lets say the Unit Cost is $1.00 and sells at $2.00.
Total sales = $100.00 and Cost = $50.00
Profit = $50.00
So from here - If you raise prices 1%, increase sales 1% and cut costs 1%, by what percentage will profits increase?
p = precentage increase (?)
k = selling price (2)
c = cost (1)
i = raise:cut percent (.01)
Let u = 1+i and v = 1-i
General case formula:
p = 100[u(ku - cv) / (k - c) - 1]
p = 100[1.01(2*1.01 - 1*.99) / (2 - 1) - 1] = 4.03 %