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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?

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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.

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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

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

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

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

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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

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

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

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

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

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Markup: $53.40 Overhead: $50.00 Net profit: $3.40 Practice 1 Answer

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Find the markup, overhead, and net profit. Selling price: $189.50 Cost: $123.56 Overhead: 25 percent of selling price Practice 2

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Markup: $65.94 Overhead: $47.38 Net profit: $18.56 Practice 2 Answer

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