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 Question from Julie, a student: how do i calculate the price per person that will return a 30% profit on the sales revenue generated?

Hi Julie,

Suppose your cost is $C and you want to add a profit amount of$P to arrive at the revenue generated $R =$C + $P. You want the profit to be 30% of the revenue generated so$P is 30% of $R or$P = 0.30 × $R = 0.30 × ($C + $P) thus$P = 0.30 × $C + 0.30 ×$P

which is

0.70 × $P = 0.30 ×$C

or

$P = 3/7$C

Hence take your cost and add three sevenths of the cost to arrive at the price you charge your customer. Since 3/7 is approximately 0.43 another way to say this is to take your cost and multiply by 1.43 to arrive at the price you charge your customer.

I hope this helps,
Penny

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