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Aim: How does a business owner control sales and profit?

Aim: How does a business owner control sales and profit?. Do Now: What do you think will determine high sales and a business’ potential to earn a profit?. Thursday, Nov. 21th. Mark-Up. A common business practice is to sell a product at a higher price than its cost. >>Why?

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Aim: How does a business owner control sales and profit?

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  1. Aim: How does a business owner control sales and profit? Do Now: What do you think will determine high sales and a business’ potential to earn a profit? Thursday, Nov. 21th

  2. Mark-Up A common business practice is to sell a product at a higher price than its cost. >>Why? • Cost: The amount the business paid for it • Selling Price/Retail Price: What a product actually sells for in the store • Markup/Gross Profit: The difference between the cost and the selling price • Net profit: When your markup (profit) is greater than your operating/overhead expenses

  3. Ex: The selling price of bed linens is $119.50, the cost is $44.78. Is the entire difference your net profit?

  4. No! Its not! This is because of overhead expenses.What are overhead expenses?The selling price of a set of bed linens is $119.50. The cost is $44.78. The overhead expense is 40% of the selling price. Find the net-profit.

  5. You Try! Giant Discounts sells a mini-vacuum cleaner for$49.99 The cost of the vacuum is $23.74. Giant estimates the overhead expenses of the vacuum to be 30% of the selling price. What is the net profit?

  6. Business owners often use records of prior sales and expenses to plan the markup rate needed to cover overhead expenses and to yield a profit SUGGESTION!!!

  7. What might entice you to buy a less popular product or service? Markdown: To discount. The difference between the regular selling price of an item and its sale price. Ex: You prefer to go to movies on Friday night, but Saturday afternoon tickets are reduced due to lower demand.

  8. Ex: Ski Stop sells cross-country skis at a regular selling price of $298.49. For one week only, Ski Stop has marked down the price to $168.94. What is the markdown?

  9. Discussion Think back to Wednesday’s brainstorm and the business you chose to start… • How could you make the highest profit possible when starting your business? • How could you find a way to increase sales? For example, the movie theaters reduce ticket prices on Saturday afternoons because of low demand.

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