0
$\begingroup$

Given a particular unit price (UP) and the desired final price (FP), I need to calculate a primary (PM) and secondary (SM) margin to achieve the final price (FP) such that the profit (SP [secondary profit]) of the secondary margin (SM) will be 50% of the profit (PP [primary profit]) from the primary margin (PM).

Take the following example:

$UP = 125, FP = 312.5, PM = 50, SM = 20$

${({UP \over 1-({PM/100})}) \over 1-({SM/100})} = FP$

${({125 \over 1-({50/100})}) \over 1-({20/100})} = 312.5$

${250 \over 0.8} = 312.5$

$PP = ({UP \over 1-({PM/100})}) - UP = ({125 \over 1-({50/100})}) - 125 = 125$

$SP = FP - (UP + PP) = 312.5 - 250 = 62.5$

${SP \over PP} = {62.5 \over 125} = 0.5$

Given the above example, if PM and SM were unknown, how could they be calculated?

$\endgroup$

1 Answer 1

1
$\begingroup$

$D = 0.5$

$PP + (PP/D) = FP - UP$

$SP = {(FP - UP) \over (1+D)/D}$

$PP = FP - UP - SP$

$SM = {100SP \over FP}$

$PM = {100PP \over UP + PP}$


Solving for SM & PM using $UP = 125, FP = 312.5, D = 0.5$

$SP = {(312.5 - 125) \over (1+0.5)/0.5} = {187.5 \over 3} = 62.5$

$PP = 312.5 - 125 - 62.5 = 125$

$SM = {100 \cdot 62.5 \over 312.5} = 20$

$PM = {100 \cdot 125 \over 125 + 125} = 50$

$({SP \over PP} = D) = ({62.5 \over 125} = 0.5)$

$\endgroup$

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .