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| Math Central | Quandaries & Queries |
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Question from bob: this is a basic question that I just can't get thru my head. I know all my cost for a product, if I want to sell at a given profit can I divide by a given Thank you for your time Puzzled in Ohio |
Bob,
Actually there are two simple answers depending on what you mean by a 30% profit.
Suppose your cost is $100 and you want your profit to be 30% of your cost. Since 30% of your cost is 0.30 × $100 = $30 you would charge your customer $100 + $30 = $130. To do that in one step it is
$100 × 1.30 = $130.
Again suppose your cost is $100 and you want your profit to be 30% of what your customer pays. If 30$ of what your customer pays is your profit then the remainder, 70%, is your cost. That is
0.70 × (what your customer pays) = $100 and hence
what your customer pays is $100/0.70 = $142.86.
Thus to calculate what to charge your customer multiply your cost by 1.30 if your profit is to be 30% of your cost and divide your cost by 0.70 if your profit to be 30% of what your customer pays.
I hope this helps,
Penny
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