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August 11th, 2017, 11:24 AM   #1
Joined: Aug 2017
From: Portsmouth, UK

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Business equation help needed please.

Hi All,

I'm new to the site, so apologies if I have posted in the wrong section.

Also, even greater apologies for asking a question that is probably really simple to answer.

I'm starting a business, selling through a third-party vendor, and need to work out a final price for my customers.
What I mean is, supposing I want to earn £1000 for an item, but the vendor takes 5% commission.

If I charge the customer £1000, after commission I receive £950.

So I add on the £50 commission and charge the customer £1050. But then the commission is £52.50, so I still only receive £997.50.

I'm sure there must be an equation to help me work out what price to charge, so that after commission I still earn my £1000, and I guess I need to work it "in reverse."

I'm not asking how much I should charge to earn the £1000, but what would be the equation to work out the final price for the customer. This is because I would have items with varying prices.

I hope that all makes sense. Any help greatly appreciated.

realdumb is offline  
August 11th, 2017, 11:40 AM   #2
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Think of it in terms of what you're left with. If the vendor charges 5% commission (or if there's a 5% tax or whatever), you are left with 95% of the price, so if you know you want to be left with, say, £950, just divide that by 0.95 to find the price the customer pays.

It's quite often the case that the concepts that are most convenient for dealing with a problem are different from those that were used to define the problem.
skipjack is online now  
August 12th, 2017, 11:56 AM   #3
Joined: Aug 2017
From: Portsmouth, UK

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Hi Skipjack,

many thanks for your reply. It all makes sense now.

realdumb is offline  

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