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So, I need a formula to help me find out profitable ventures.

I am buying items for X and selling them for Y. However, there are fees involved.

Everytime I buy an item, an additional 1% of my money goes to a third party. Everytime I sell an item, 3.8% of my money earned goes to a third party.

I need to find out at what value of Y do I start to lose money.

For an example:

I buy an item for \$383.00. After the fee is applied, I am buying that item for \$386.83. If I sell it at 419.97, I'm selling it realistically for $404.01.

That's wonderful, I'm making $17.18 per unit sold.

However, how do I find out the lowest price I can sell that item for to keep a positive profit? I already found out that the lowest profitable sell price would be $402.12. However, I don't want to guess; I need a formula.

flawr
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Cody Sharp
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  • Can you please also say which price is $X$ and $Y$ in the example you suggested? – flawr May 18 '16 at 09:34
  • Each time you buy an item, you actually pay $1.01X$. Each time you sell an item, you actually get paid $0.962Y$. In order to make profit you need to ask when $1.01X<0.962Y$ or in other words when $Y>\dfrac{1.01}{0.962}x$. You might want to check it for your example. – Galc127 May 18 '16 at 09:39
  • Sorry, I'm horrible at phrasing the questions. I think your answer gave me just what I needed. Thank you! I was asking the question from just pure curiousity so I had nothing to base it on. – Cody Sharp May 18 '16 at 09:42

1 Answers1

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$\mathrm{Profit = Earning - Cost} = (1 - 3.8\%)Y - (1 + 1\%)X = 0.962Y - 1.01X$ , which has to be greater than $0$. So, $Y > \dfrac{1.01}{0.962}X$.

Galc127
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Xerophil
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