# 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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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 Find the net profit as a percent of the selling price. Content Vocabulary net-profit rate The net profit on an item expressed as a percent of the selling price.

Giant Discounts sells a vacuum cleaner for \$49.99. The cost of the vacuum cleaner to Giant Discounts is \$23.74. Giant estimates the overhead expenses on the vacuum to be 30 percent of the selling price. What is the net-profit rate based on the selling price of the vacuum cleaner? Example 1

Find the net profit. Markup – Overhead (\$49.99 – \$23.74) – (\$49.99 × 30%) \$26.25 – \$15.00 = \$11.25 Example 1 Answer: Step 1

Find the net-profit rate. Net Profit ÷ Selling Price \$11.25 ÷ \$49.99 = 0.2250 or 22.5% Example 1 Answer: Step 2

A doll costs the Toy Store \$7.85. The doll has a selling price of \$16.96. The store estimates overhead at 28 percent of the selling price. Find the net-profit rate based on the selling price. Example 2

Find the net profit. Markup – Overhead (\$16.96 – \$7.85) – (\$16.96 × 28%) \$9.11 – \$4.75 = \$4.36 Example 2 Answer: Step 1

Find the net-profit rate. Net Profit ÷ Selling Price \$4.36 ÷ \$16.96 = 0.2570 or 25.7% Example 2 Answer: Step 2

Find the markup, overhead, net profit, and net-profit rate. Selling price: \$41.25 Cost: \$23.25 Overhead expense: 25 percent of selling price Practice 1

Markup: \$18 Overhead: \$10.31 Net profit: \$7.69 Net-profit rate: 19% Practice 1 Answer

Find the markup, overhead, net profit, and net-profit rate. Selling price: \$459.45 Cost: \$205.35 Overhead expense: 45 percent of selling price Practice 2

Markup: \$254.10 Overhead: \$206.75 Net profit: \$47.35 Net-profit rate: 10% Practice 2 Answer

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