Per the source below, here is how to figure the gross profit percentage:
1 Calculate gross profit by taking total gross or sales revenue, minus total sales costs or cost of goods. If you sell your product for $10 and it costs you $4 to manufacture (known as cost of goods) or $4 to buy wholesale, your gross profit is $6.
2 Divide your gross profit by your gross sales revenue to get your gross profit percentage. Using the example in Step 2, you would divide your gross profit of $6 by your revenue of $10, for a 60 percent gross profit.
3 Note that the gross profit percentage is profit before operating expenses, such as paying salaries and turning on the lights.
So the formula to get the gross profit percentage is:
gpp = (selling price - cost) / selling price
But we want to know the selling price if we know the other two. So, in the formula, we want to isolate the selling price variable.
gpp = (selling price - cost) / selling price
selling price * gpp = (selling price - cost)
selling price * gpp - selling price = - cost
selling price * (gpp - 1) = - cost
selling price = (- cost) / (gpp - 1)
Or you could multiply the right half by -1 / -1, giving you:
selling price = cost / (1 - gpp)
1 Calculate gross profit by taking total gross or sales revenue, minus total sales costs or cost of goods. If you sell your product for $10 and it costs you $4 to manufacture (known as cost of goods) or $4 to buy wholesale, your gross profit is $6.
2 Divide your gross profit by your gross sales revenue to get your gross profit percentage. Using the example in Step 2, you would divide your gross profit of $6 by your revenue of $10, for a 60 percent gross profit.
3 Note that the gross profit percentage is profit before operating expenses, such as paying salaries and turning on the lights.
So the formula to get the gross profit percentage is:
gpp = (selling price - cost) / selling price
But we want to know the selling price if we know the other two. So, in the formula, we want to isolate the selling price variable.
gpp = (selling price - cost) / selling price
selling price * gpp = (selling price - cost)
selling price * gpp - selling price = - cost
selling price * (gpp - 1) = - cost
selling price = (- cost) / (gpp - 1)
Or you could multiply the right half by -1 / -1, giving you:
selling price = cost / (1 - gpp)