Using my Jr. High Algebra
On Tuesday morning I made a list of tasks to keep me moving forward. That day I did 3 items off the list and another I added to the list on my way to the post office. (I never knew it could take 1+ hours to open a business bank account.)
I kept working on the list on Wednesday and today. There are only 2 tasks left on the list! (I would have finished the list sooner if I hadn’t kept adding things to it as I thought of them.)
The thing I spent the most time on today was creating a price list for a local shop that carries gifts and original art. My prices for the shop needed to include their commission so I’m not doing artwork to line everyone else’s pockets but mine. I went down many rabbit holes in the process that included how much would it cost to do a coloring book? and how much do I need to save up to self publish a board book?
I also dusted off my Jr. High Algebra to figure out the formula I needed to create the price of something with a known profit margin.
For instance, if a product costs me $5.50 and I want to have a 40% profit margin, what’s the formula that I can enter in the cost and get the retail price?
I started with Net Profit Margin = (Retail price - cost)/ Retail Price.
When I punched in my Profit Margin as 0.4 and rearranged the formula, I got Cost=0.6(retail price). I ran off to test out this formula that was going to make everything easier or unnecessary. Until I realized I had solved for the wrong variable. I already knew the cost. I was looking for the retail price.
I rearranged the variables so I was solving for Retail Price and got: Retail Price=cost/0.6 And it WORKS! At least it works if you want a 40% profit margin.
As I used this to see whether or not I could use a particular vendor to print a future product, I realized that I could manipulate the formula to let me change the Profit Margin.
The new formula looks like this: Retail Price = cost / [1 - (desired Profit Margin)].
Who says artists can’t also be good at math? Thank you, Jr. High Algebra teacher.