# How to derive a simple profit equation. Kinda embarrassing.

## Main Question or Discussion Point

I made this excel file that is basically a calculator. It needs to create a Total price after fees, profit and supplier cost. Most profit margin calculators have you add a percentage for profit... this is not what I want. I have a hard dollar amount.

You must know that the entire transaction includes supplier cost, profit and fee. The fee is charged from the total of the Transaction. I do not want to brute force until I find a total price that equals 5 bucks in profit.

For instance...

Supplier Cost : $50 Profit I want to make :$5
10% Transaction Fee : ?
Total to charge : Some unknown without brute force.

Currently you put the Supplier cost and a GUESS of the Total price. And keep adjusting while watching your profit until it gets to $5 bucks. So here is an example.... Enter Supplier cost..... ___$50___
Enter Profit to make.... ___$5____ With this info I need it to spit out the total to charge so that the money left in the account is enough to *pay supplier *Pay transaction fee *And exact profit of$5 is what is left.

In this case...
*Fee is: $6.11 *Total price is$61.11

Customer is charged 61.11 and we pay a transaction fee and a profit. It should zero out.

Does this make sense?

SteamKing
Staff Emeritus
Homework Helper
Have you tried algebra?

You know:

T = total price

X = transaction cost

F = transaction fee = 0.1 * X

F + X = T or 0.1 * X + X = T, which means

1.1 * X = T

X = T / 1.1

X = Cost + Profit = T / 1.1

So Profit = (Total Price / 1.1) - Cost

Something like this?

The problem is we have 2 unknowns: Transaction fee and Total Price.

Fee can be derived from Total Price.
Total price can be derived from Fee + Cost + Profit

We only have Cost and Profit

Basically, I could write a brute force method in Java, but I just think there is some math I do not understand. Probably because there is 2 missing variables. Fee and Total.

Edit: I looked at your math and I am unsure it does what I am trying to do. Maybe I am missing something. Thank you.

Mentallic
Homework Helper
Basically, I could write a brute force method in Java, but I just think there is some math I do not understand. Probably because there is 2 missing variables. Fee and Total.

Edit: I looked at your math and I am unsure it does what I am trying to do. Maybe I am missing something. Thank you.
You have two variables, but you also have two equations that relate those variables.

S = supplier cost
P = profit to make
F = transaction fee
T = total price

So we have that

T = S+F+P

We know S and P, so they're constants, so we have two variables in that equation, T and F.
The other equation is:

0.1*T = F

So then if we plug 0.1*T for F into the first equation, then we get

T = S + 0.1*T + P

solving for T,

T - 0.1*T = S+P
(1-0.1)T = S+P
T = (S+P)/0.9

and then plugging this value for T back into the second equation, we get

0.1*(S+P)/0.9 = F

T = 10/9*(S+P)
F = 1/9*(S+P)

You can easily generalize this procedure so that you can use any % in your transaction fee that you wish.

Wonderful! Thank you both for the time and effort not only does this work, but I understand it completely. I also added a way to change the percentage on the calculator. Wonderful!

Mentallic
Homework Helper
Wonderful! Thank you both for the time and effort not only does this work
Well of course it works, it's Math ;)

but I understand it completely. I also added a way to change the percentage on the calculator. Wonderful!
That's good to hear!