Problem: How To Get The Same Profit With Increased Sale Price

Starmonger

I'm listing a product for sale on Ebay, and wondering if someone can help solve this mathematical problem:

If you sell a product to the US it costs let's say \$3 for the shipping, which we add into the overall sale price of the item. If we then sell the same product to the UK, it costs us \$10 for the shipping, so if we want to get the same profit we can add the \$10 onto the item sale price instead, so essentially the product costs an extra \$7 to someone in the UK than someone in the US. Simple enough.

However, the fact is that we also owe eBay a 10% fee on the sale price, AND we also owe the government 10% in tax on the sale price of the item. So, the problem is how do we figure out what the sale price of the item should be to get exactly the same profit if we sold to the UK as with the US? Because when we increase the sale price by adding the difference between the higher shipping cost and the lower, we also end up owing more in eBay fees and tax as a result.

It seems that there must be some formula to calculate this increase, set the sale price to the correct amount to end up with the same profit.

So in my attempts to try to figure it out, I came up with such as thing as for example:

To calculate the increased eBay fee, you could say the sale price to the UK minus the sale price to the US. And then simply what is the 10% eBay fee of that difference in price? And the same thing for the tax. Then, stick it onto the price and you should be sorted. BUT NO, it ain't that simple because as soon as you whack that extra bit onto the sale price, the price gets higher again and a bit more in tax and fee is again needed from the new increase.

This is where my poor mathematical knowledge has reached its limit my friend, and I am stumped.

It seems there must be some formula to calculate the recurring increase in the fee/tax portion and end up with the correct sale price to reach the same profit as the US sale.

Any ideas?

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EvanJ

The fees and taxes reduce the revenue from x to 0.8x, so take 7/0.8 = 8.75.
The difference should be \$8.75. Here's an example. US: \$10 price - \$2 for two fees or taxes of 10% each - \$3 shipping = \$5 profit UK: \$18.75 price - \$3.75 for two fees or taxes of 10% each - \$10 shipping = \\$5 profit

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Starmonger

This is absolutely perfect! thanks, just what I was looking for. It works and has solved the problem. Thanks again