Question

I bought an item for $57 and I sell it for $100. My profit will be $43. Is that a profit? I need to break even?

1 year ago - 3 answers

Best Answer

Chosen by Asker

Your gross profit is 43 but you have cost of running the business like your salary, rent, heat, lights, payroll taxes, business taxes and licenses.

If you had a store selling 10,000 of these a month could you do it with only 4,300 worth of expenses? If you sold 100,000 could you do it for 43,000 of expenses after the cost of purchasing the merchandise?

We burden each dollar of labor with .61 cents of cost of overhead and mark up materials 20% but still if we don't bill enough we lose if we bill more than enough we have profits.

You need to figure out your overhead not just your gross margin.

1 year ago

Other Answers

Not the sharpest knife in the drawer, are you?

by emgee - 1 year ago

$43 is your gross margin. To get to profit, you have to figure out any costs you incurred in the purchase or the sale. Did you drive to purchase or sell (cost of gas). Did you advertise or other expenses? And then also your time. If you could have been doing something else generating income, you have to consider that an opportunity cost as well.

by C-Lo - 1 year ago