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Math Help - Raise prices 1%, increase sales 1% and cut costs 1%, by what percentage will

  1. #1
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    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!
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  2. #2
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    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
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  3. #3
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    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?
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  4. #4
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    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)?
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  5. #5
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    Re: Raise prices 1%, increase sales 1% and cut costs 1%, by what percentage will

    Quote Originally Posted by ronb View Post
    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 %
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