The times dispatch. [volume] (Richmond, Va.) 1903-1914, 1905-12-31

-,AR1OUs letters have beensreoeived by
the writer for mora information on
NJ the subject OF figuring profits on lu1er-
s%chandise. The Information desired IL
On the method OF figuring those profits
% the way most likely to- avoid error, and
unconscious losses. with the accompanying
disaster that must overtakc those cropping
In the dark. I contended that the only way
to arrive atethe proper percentage OF profit
on ANY commercial transaction was to ascer-
tainEwhat proportion Of the sale was, or would
be, profit, never attempting to arrange the
percentage OF gain by adding to the cost, q
percentage OF that cost, equal to the mount
OF profit desired or In other words. In adding
i 25conts to d dollar, assuming you are making
a pront.of rs per cent.
or we all know that ft Is dificult to
convince every one on any subject. and bring
them all to zone way of thinking In Ascase
like the ones before mo It probably would be
tthes{best wnyEout Of the dim Guilty to refer
those inssearchS OF Information 30 the head Of
the once IN any large Wholesale house. a
visit to my OF these houses would 4 think,
furnish the seelsor after information with
plenty OF It, all OF which would betlin favor
81 my contention. I would 1nuchflike to see
this matter brought before the public at
largo more forcibly than 4 ever could hope
to do 1t, for as one Of my correspondents re-
marks, !" Itsi a matter OF the most intense
al1id vital Importance to the business world"
and, I might add, but little understood.
Blunder Of Contracting Plumber.
Only q few days ago an amusing case came
under my observation going to show how
poorly armed for business IS he who doesn't
understand this subject clearly.
"A young business mana plumber s%strange
as that may seem-was} figuring on q con-
tract HIS labor and raw material he tig-
ured, would cost him IN round figures. SoOO.
Wishing to make q profit Of 20 pergcen ne
proceeded to add 20 per cent o$$the cost.
making his complete bid 5000: SVhen}he got
through I asked him how much profit he
you'd make at that rate II heidi a5Sbusiness
OF $4,000. He answered with al knowing
smile and t%rlulm,pphhanuttly $4,000. j asked him
to apply the mode ot. reasoning by which
he had reachedSthat Conclusion to the bid
before him and. see tltwould work, and his
surprise when he found 1t wouldn't was
great. He had been doing usinessal II along
withsthe idea tina adding 20 percent to the
Sc6st would give him$a profit OF 20 per cent
on his business.
Many do 1t. Everyone figuring his profits
in that way Is up a against Just suchSfproposi-
tons as the above. They never know where
sthey4stand, while, II they figure the Other
~wuay,snothing can undermine their position.
81 course, the profit In dollars 4 d8cents Is
the same, In either case, but the percentage
is what vel to doSwlth, and; not one sin
gle argument can be conjured up in5favors OF
figuring HI prolific the cost.3swhile any
number Of them ca \ be ronght=to5he s- e
the other method ss
%g ro u - For meta rco the case If n new firm
about to engage in business, The first thing
3they{would speculate to on would be the amount
OF business they would besllke1y to 90. The
next, the amount OF profit they should make.
suppose they should FIX the average amount
OF the latter at Is per cent, obtaining Il Dy
adding % per cent to the cost OF the goods.
The next thing In order would be figuring
and one Of the first thlngs ~ 70
that connection to be disc1sseds55would ssbe
the cost OF ellingygoods.N9sssey$t they snx this
at s per cent. Eight per cent OF what?.The
cost? O., no! A. salesman must be PAID on
his sales, and 8 percent on the sales, in this
instance, is the same as 10 per cent on the