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!

You probably should define a base.

Unit Price = Unit Cost + Unit Margin
Total Profits = Total Sales - Total Costs

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?

Do you know how to do percentage calculations?


Is "increase sales" referring to sales value ($) or sales volume (units)?

Quote:

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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?

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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 %