Re: Price increase question

Re: Price increase question

Let's start with a simple example:

1000 (sales) @ 30% (margin) = 300 (revenue)

1250 (sales) @ 24% (margin) = 300 (revenue)

Sooooooo...in order to get SAME revenue:

if margin=30% and is reduced by 6% (30% - 24%),

then sales must increase by 25% (1000 * 1.25 = 1250).

Go check above in your attachment:

you'll see above result clearly in 3rd column, 3rd row.....

Formula is quite simple:

c = current margin (30)

r = reduction to margin (6)

i = increase in sales (?)

i = c / (c - r) - 1

So (above example):

i = 30 / (30 - 6) - 1

i = 30/24 - 1

i = 1.25 - 1

i = .25 or 25%

If you want result to come out as 25% instead of .25:

i = 100[c / (c - r) - 1]

Let me know if you need more info...hope that helps...