MHB Calculating Retail Price Based On Gross Profit Margin Percentage with commission

[sealsseals]

Hi,

How do I calculate the retail price for the following scenario:

Retail price less a 20% commission less the cost of the product = a 15% gross profit margin (Gross profit margin percentage = (retail price - total cost (20% off of retail and cost of product)) / retail price

I know what the cost of the product is ($10.00) and I know the gross profit margin % I want to make is (15%) and I know what the commission percentage off of retail will be (20%), how do calculate what the retail price should be to achieve desired gross profit margin %?

 

[Wilmer]

Outch...the wording of your problem makes my head spin :)

Here's what I understand it is; example:
Cost of widget: 100

Customer Joe pays : 150
Jack the Salesman gets: 30 (20% of 150)

Left for you is 150 - 30 = 20 : that's 20% of the cost.

How did I do?!

 

[sealsseals]

Thank you for the reply. Partially correct.

First you must understand gross profit margin % in the context of this question which is retail price-cost/retail price, for example if the retail price is 15.00 and the cost is 5.00 then the gross profit margin % is 15-5/15=66%, this means that 66% of the retail price is profit, 15*66%=10.00, this is correct because 15 retail minus 5.00 cost equals 10.00, 10.00 is the gross margin profit in dollars (not %).

I'm trying to figure out how to calculate what the retail price should be to earn 15% gross profit margin when my cost in the above example is the cost of the product AND a 20% commission of the retail price. I will always know the gross profit margin % I want to make, and the cost of the product and the % of commission off retail, I just now need to know how to calculate what the retail price should be. Make sense?

 

[Wilmer]

...which is retail price-cost/retail price, for example if the retail price is 15.00 and the cost is 5.00 then the gross profit margin % is 15-5/15=66%,...

Above should be: (retail price - cost)/retail price and (15 - 5)/15.
Brackets are required; else 15 - 5/15 = 14.66.

FORMULA: r = c / (1 - k - m)

Example:
cost = c (130)
commission = k (.20)
margin = m (.15)
retail = r (?)

r = 130 / (1 - .20 - .15) = 200

+200 (retail)
-130 (cost)
-040 (commission)
------
+30 (margin)

Hokay Dokay?

 

[sealsseals]

Brilliant! Thank you very much for your help, exactly what I needed!