Could you help me with this question please?

How do I calculate the gross profit by percentage on and a product I purchased for $23.80 marked up 45% sold for $34.51 = profit of $10.71 GP by percentage????????

Thank You

Mark

 

Hi Mark,

We are all somewhat sloppy when we use the term percentage. We should always ask the question "percentage of what?"

When you say that you marked up your cost 45% to get $34.51 you did exactly what I would have done. Your cost was $23.80 and 45% of $23.80 is 0.45 $23.80 = $10.71. This is your gross profit.

You want your gross profit as a percentage and I want to know, a percentage of what? If you want to express your gross profit as a percentage of your purchase price then it is 45%. That's what you did. If you want your gross profit as a percentage of your selling price then you need to ask:

What percentage of $34.51 is $10.71?

I translate this English statement into a mathematical statement (equation) using the following

  • "what" is the unknown, call it x
  • "percent" is per-one-hundred, that is over 100
  • "of" is multiplication
  • "is" is the verb, which in an equation is the equal sign

Thus the English statement above becomes

  x/100  $34.51 = $10.71

Solving for x yields

x = 31.03

Hence the gross profit is 31% of your selling price.

Penny