# Selling Price In order to make money by selling a product, you need to sell it for more than it costs. How do you determine how much to charge for a product?

## Presentation on theme: "Selling Price In order to make money by selling a product, you need to sell it for more than it costs. How do you determine how much to charge for a product?"— Presentation transcript:

Selling Price In order to make money by selling a product, you need to sell it for more than it costs. How do you determine how much to charge for a product?

Lesson Objective Determine the net profit in dollars. Content Vocabulary operating expenses Also known as overhead, the costs of running a business, such as wages and salaries of employees, rent, utility charges, and taxes.

Sport Shop purchases water tubes for \$44.98 each. It sells the tubes for \$89.99 each. The owner estimates the overhead expenses to be 40 percent of the selling price of the merchandise. What is the net profit on each tube? Example 1

Find the markup. Selling Price – Cost \$89.99 – \$44.98 = \$45.01 Example 1 Answer: Step 1

Find the overhead. Selling Price × Overhead Percent \$89.99 × 40% = \$35.996 or \$36.00 Example 1 Answer: Step 2

Find the net profit. Markup – Overhead \$45.01 – \$36.00 = \$9.01 Example 1 Answer: Step 3

Anamaries Shoppe buys chemises at a cost of \$12.78. Anamaries sell the chemises at a selling price of \$24.49. Its management estimates the overhead expenses to be 34 percent of the selling price of the merchandise. What is the net profit on each chemise sold? Example 2

Find the markup. Selling Price – Cost \$24.49 – \$12.78 = \$11.71 Example 2 Answer: Step 1

Find the overhead. Selling Price × Overhead Percent \$24.49 × 34% = \$8.3266 or \$8.33 Example 2 Answer: Step 2

Find the net profit. Markup – Overhead \$11.71 – \$8.33 = \$3.38 Example 2 Answer: Step 2

Find the markup, overhead, and net profit. Selling price: \$124.99 Cost: \$71.59 Overhead: 40 percent of selling price Practice 1