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Published on February 12, 2014

Author: strategicaccountants

Source: slideshare.net

How much do you need to sell if you give your customers 10% discount? Guideline to pricing your products part 1

The mark up price It’s easy! If your mark up price is 50% Your gross profit margin is 33% For example Cost of product for you Mark up 50% Selling price \$ 100 \$ 50+ \$ 150 Your gross profit is \$ 50 [or 33% per sold product] www.strategicfp.net.au | enquiries@strategicfp.net.au | +61 (0)7 4963 5200

What if you give only on your product? www.strategicfp.net.au | enquiries@strategicfp.net.au | +61 (0)7 4963 5200

Let’s see shall we? 10% discount of \$ 150 = \$15 Your gross profit is \$ 35 [or 26% per sold product] Selling price becomes \$ 135 Cost of product for you \$ 100Gross profit \$ 35 So you now make \$ 15 less Which means…. www.strategicfp.net.au | enquiries@strategicfp.net.au | +61 (0)7 4963 5200

Wow! To make the same gross profit, you have to sell 25% (approx.) more of your product. www.strategicfp.net.au | enquiries@strategicfp.net.au | +61 (0)7 4963 5200

If you want your dreams to come true, the first thing you have to do is WAKE UP!

Let’s take it one step further For example, if.. Your annual sales = 33% is gross profit = Now with 10% SALE.. Your annual sales = 26% is gross profit = \$ 500.000 \$ 165.000 \$ 500.000 \$ 130.000 To earn the same Gross Profit.. Sales have to go up to Gross profit of Keeping it simple \$ 625.000 \$ 162.500 www.strategicfp.net.au | enquiries@strategicfp.net.au | +61 (0)7 4963 5200

Conclusion Discounting is not the best strategy for your business.. If you’d like to get better advice, contact us today. www.strategicfp.net.au | enquiries@strategicfp.net.au | +61 (0)7 4963 5200

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