Subject: Re: Understanding the Pricing Formula
Date: Mon, 24 Jun 2002 22:20:53 +1000
From: "David Taylor - MAD Balloons"
Stop. Move to the other side of the room and look at it from there.
$40.00 is the sell price. To make 50% gross profit you have to sell it at
that price because the item cost you $20 to create. $20 (or 50%) is the
cost to create the decor and $20 (the other 50%) is your gross profit.
Hopefully this is clearer than mud. Use the qualatex formula because it is
a good one. Once you have your sell price work backwards to check it and
make sure you are happy that your profit margin will cover the decoration
costs as well as your business costs. And then you can continue to Go MAD
with Balloons.
David Taylor CBA
MAD Balloons
www.madballoons.com.au
ph. (02) 9638 7432
fax (02) 9801 1669
Save a Tree, Buy a Balloon
> We at B&C Balloon Creations are trying to work out our pricing structure.
> So those of you who are good with accounting and/or math help us out. Just
> for the record all numbers are fictious. Now lets say for argument sake
> that the design we created, total cost is $20.00 and for the sake of
> argument we want to use 50% as our Gross Profit %.
> If we use the formula that has been suggested by QBN then the actual
> selling price of this item would be $40.00. Now if we just take 50% of the
> $20.00 which is $10.00 and add that to the $20.00 the selling price is now
> $30.00.