Math Is Fun Forum

Stuart

Guest

Turning a Profit on -%GPM, Possibly Exponential Markup?

Maths has never been my strong point, how I have go this far in life is beyond me!   My Problem is with product pricing.  The products I sell need to be sold at Retail Price [MSRP], however sometimes that just is not possible, do to online fees, delivery charges etc.

I have got as far as working out my Gross Profit Margin (which might not sound like a big deal, but for a guy that is learning to code this in SQL and Failed secondary school maths with an F is a big deal!).

Applying a blanket linear markup I don`t think is the correct approach, whilst that might work out great for a £0.60 bar of soap, it would`t work for a £200.00 Brush.  So 'I think' I need to work on an 'exponential markup' -or- do I work on engineering a break even point first then add a linear markup?  Maybe both a wrong and this is a great deal more complicated... 

I do know that I am now very much out of my depth...

Source	SKU			MSRP	Cost		GPM
AMAZON	03F-C18-B93		78	60.312		22.6769230769231
AMAZON	FBA-03F-C18-B93		78	59.556		23.6461538461539
EBAY	03F-C18-B93		78	62.618		19.7205128205128
AMAZON	3C2-2F4-14C		46.45	30.555		34.2195909580194
AMAZON	FBA-3C2-2F4-14C		46.45	29.799		35.8471474703983
EBAY	3C2-2F4-14C		46.45	32.0105		31.0861141011841
AMAZON	4E9-071-C53		9.99	16.3665		-63.8288288288288
AMAZON	FBA-4E9-071-C53		9.99	15.6105		-56.2612612612613
EBAY	4E9-071-C53		9.99	16.83623	-68.5308308308308
AMAZON	4EC-CFA-EBA		79.95	108.3645	-35.5403377110694
EBAY	4EC-CFA-EBA		79.95	110.72315	-38.4904940587867
AMAZON	6A0-0D6-A0E		4.4	6.18		-40.4545454545454
AMAZON	FBA-6A0-0D6-A0E		4.4	5.424		-23.2727272727273
EBAY	6A0-0D6-A0E		4.4	6.4988		-47.7

The above block shows some prices that I am working with, the Cost accounts for the 'Free Delivery' (grr) and the channel fee all prices are inclusive of Taxes.

Can I take some of your time to help me achieve this? (I have a PayPal account if required and would happily pay for assistance).

Stuart :-(

thickhead

Member

Registered: 2016-04-16

Posts: 1,086

Re: Turning a Profit on -%GPM, Possibly Exponential Markup?

Deal with only products of healthy G.P.M

---

{1}Vasudhaiva Kutumakam.{The whole Universe is a family.}
(2)Yatra naaryasthu poojyanthe Ramanthe tatra Devataha
{Gods rejoice at those places where ladies are respected.}

wired-circuit

Member

Registered: 2016-06-04

Posts: 4

Re: Turning a Profit on -%GPM, Possibly Exponential Markup?

[comment removed by administrator].  Have you considered I might be the manufacturer or that I might have to stock all items regardless because I'm a distributor.  Maybe you should also consider that even as a reseller, the other resellers have the same problem?   I have a question, the question was not for you to question my reasoning, but for assistance with providing a solution to a mathematical problem.[comment removed by administrator].

Last edited by wired-circuit (2016-06-05 02:39:18)

bobbym

bumpkin

From: Bumpkinland

Registered: 2009-04-12

Posts: 109,606

Re: Turning a Profit on -%GPM, Possibly Exponential Markup?

Hi wired-circuit;

the question was not for you to question my reasoning

When someone is evaluating your work that is what is precisely being done, questioning the posters reasoning. This is how errors are found. Also, when on any forum you have to develop a rather thick skin. I have replaced comments that were not essential to this question and we can proceed from there.

Can you explain in detail to someone who knows nothing of your business or any other what it is you want done mathematically speaking?

---

In mathematics, you don't understand things. You just get used to them.
If it ain't broke, fix it until it is.
Always satisfy the Prime Directive of getting the right answer above all else.

wired-circuit

Member

Registered: 2016-06-04

Posts: 4

Re: Turning a Profit on -%GPM, Possibly Exponential Markup?

Simply stating 'Deal with only products of healthy G.P.M' is not helpful is it?

I have been speaking with a freelancer on resolution to the problem, he understood the requirement, I'm not to sure why it is that you do not and frankly I'm not sure how else to write the question.  Sometimes that is half the problem right?  I certainly appreciate that as I have worked in the IT industry for over 20 years.

The freelancer writes in response: "The ideal is to assess how the fees affect the system and then create a statistical model to indicate the risk of each product.  In this way we can evaluate the set of all products for which profit margins stay positive."

bobbym

bumpkin

From: Bumpkinland

Registered: 2009-04-12

Posts: 109,606

Re: Turning a Profit on -%GPM, Possibly Exponential Markup?

I'm not to sure why it is that you do not

Here is what your question looks like on my browser.

Unfamiliar terms, unknown what goes where, etc.

Math is hard enough when the question is perfectly clear, when there is uncertainty in the question itself then math becomes impossible. What are the goals? Are you trying to maximize profit, minimize cost? What are the constraints involved? If the freelance consultant you speak of can express the data in terms of inequalities and equations and is unable to solve them then have him post them to me. As it stands, I am unable to assist you.

---

In mathematics, you don't understand things. You just get used to them.
If it ain't broke, fix it until it is.
Always satisfy the Prime Directive of getting the right answer above all else.

wired-circuit

Member

Registered: 2016-06-04

Posts: 4

Re: Turning a Profit on -%GPM, Possibly Exponential Markup?

OK, lets take a different approach to this.  Would a better way of approaching this to find the break even point on [Cost] THEN apply linear markup?

[Purchase]+[Postage] is my base cost.
[Purchase] = 10.00
[Postage] = 2.00

Selling on eBay or Amazon at [Purchase]+[Postage] would yield a loss, since they would charge a sales fee.
[Fee] = 15%

(10.00+2.00) = 12.00
(12.00*0.15) = 1.8
(12.00-1.8) = 11.73
(((12.00-((10.00+2.00)+1.80))/12.00)*100) = -15%

If a 15% sales fee was added to (([Purchase]+[Postage])*1.15), that would still yield a loss, since the price has been increased, in turn the sales fee would be also.
[Fee] = 15%

((10.00+2.00)*1.15) = 13.80
(13.80*0.15) = 2.07
(13.80-2.07) = 11.73
(((13.80-((10.00+2.00)+2.07))/13.80)*100) = -1.95652173913%

So what is the best approach to the problem?

wired-circuit

Member

Registered: 2016-06-04

Posts: 4

Re: Turning a Profit on -%GPM, Possibly Exponential Markup?

(((10.00+2.00))/(1-0.85))

ElainaVW

Member

Registered: 2013-04-29

Posts: 580

Re: Turning a Profit on -%GPM, Possibly Exponential Markup?

Hello:

(12.00-1.8) = 11.73 ? What's that?