Profit Calculation for a Shopkeeper Selling Tables
In the realm of retail and wholesale, accurately calculating profit margins is crucial for making informed business decisions. A shopkeeper recently made an interesting purchase: he bought 200 tables for Rs 12,000. His plan was to sell these tables at a profit high enough to cover the cost of 20 tables, essentially allowing him to get 20 tables free from his profit. This article aims to explore how to calculate the required profit percentage to achieve this goal.
Understanding the Basics of Profit Calculation
To calculate profit, we first need to understand the fundamental equation:
Profit Selling Price – Cost Price (CP)
Profit Percentage (Profit/CP) * 100
The Shopkeeper's Specific Scenario
The shopkeeper bought 200 tables for Rs 12,000. Let’s consider the following steps to determine the required selling price per table:
Calculate the Cost Price (CP) per table:
CP per table Total CP / Number of tables
CP per table Rs 12,000 / 200 Rs 60
Determine the total cost for 180 tables (since the shopkeeper plans to get 20 tables free):
Total CP for 180 tables CP per table * (200 - 20) Rs 60 * 180 Rs 10,800
Calculate the total selling price (SP) for 180 tables:
SP Total CP for 180 tables Total Profit for 180 tables
Total CP for 180 tables Rs 10,800 (as calculated above)
Total Profit for 180 tables Total CP for 200 tables - Total CP for 180 tables Rs 12,000 - Rs 10,800 Rs 1,200
Therefore, SP for 180 tables Rs 10,800 Rs 1,200 Rs 12,000
Find the new selling price per table:
New SP per table Total SP for 180 tables / 180 Rs 12,000 / 180 Rs 66.67
Calculate the required profit percentage:
Profit per table New SP per table - CP per table Rs 66.67 - Rs 60 Rs 6.67
Profit Percentage (Profit per table / CP per table) * 100 (Rs 6.67 / Rs 60) * 100 667 / 60 ≈ 11.12%
Hence, the shopkeeper should sell each table for Rs 66.67 to achieve the desired profit of 20 tables free, which translates to a profit percentage of approximately 11.12%. This calculation ensures that the shopkeeper covers not only his initial investment but also achieves the goal of receiving 20 tables for free.
Conclusion
Using the principles of retail math, you can calculate the profitability of your products and make informed decisions. Understanding the KPIS (Key Performance Indicators) like profit percentage can help you optimize your pricing strategies and enhance your business performance. This example demonstrates the importance of cost management and strategic pricing in achieving business goals.