cost of goods sold, cost of doing business + mark up = profit ..............................hopefully
Not sure what you were thinking on that post! You seem to lump all costs + seller mark up into profit! Not making any sense there. Maybe you were thinking (price of goods sold) MINUS (cost of doing business + markup) = profit??
More like:
PRODUCT COST +
OVERHEAD COST +
TAXES +
MARK-UP (PROFIT) =
CONSUMER PRICE
The one aspect I don't think people see is
availability of product (supply), and its effect on consumer prices.
Example: a store has $1,000/week overhead expenses. It normally sells on average100 items per week.
Assuming all items are the same thing/cost (let's go with Sporting Rifles), that means
they have to add $10 ($1,000 OH/100 items) to each item.
That excludes tax and profit, but this is just for illustration.
However, if they were unable to receive any new products for weeks, and what deliveries they did get were less than normal due to high demand, then they may only have 50 items to sell this week.
That's $1,000 OH/50 items = $20 additional cost per item.
The result is a higher price for the end buyer.
The Store makes no more profit, but the extra money per item does keep the employees paid, the building's doors open and the lights turned on.
It's not about taking advantage of the panic, pleasing customers, or earning more profit.
It's about math. If you take in less revenue than you have to spend for any reason, then you aren't going to have to worry about customer satisfaction for very long!