THE NEW YORK JOURNAL OF PHARMACY 



ant facts about his percentage of ex- 

 pense, his percentage of gross profit, 

 and his percentage of net profit. I come 

 now to the next phase of the subject: 

 how shall these facts, so discovered, be 

 used in the actual conduct of the drug 

 business? What is their bearing? I 

 have said that these things should be 

 known by every druggist, that it is ab- 

 solutely impossible to do business wisely 

 without them, and that the druggist who 

 ignores them is criminally negligent of 

 his own welfare. Whv is this so? 



In answering these questions I say at 

 the outset that the benefits of such in- 

 formation are almost innumerable. If 

 the druggist's expenses are too great he 

 can see the cardinal necessity of cutting 

 them down. If his gross profits are too 

 small he can likewise see the necessity 

 of jacking them up. If he is necessarily 

 selling too many things at a low yield 

 of profit he can scratch his head and put 

 in other lines that will bring up the gen- 

 eral average. If he discovers that his 

 prescription business isn't at all the 

 profit-maker that he thought it was, he 

 can charge more for his services — the 

 big fellows do it, even if they are sup- 

 posed to be cut raters. 



The Actual Pricing of Goods. 



To be more specific, I may say that 

 the percentage of expense is something 

 that a druggist should know accurately 

 every time he fixes the price on an ar- 

 ticle. He should understand to a nicety 

 just what it is going to cost him to sell 

 that article — this hair brush, for exam- 

 ple. The druggist who doesn't know his 

 costs is the druggist who sells a lot of 

 goods at figures so low that he doesn't 

 pay expenses on them, let alone making 

 any profit for his own pocket. 



Now, suppose we know that our per- 

 centage of expense is 24, and we want 

 to get a gross profit of 34 or 35 per 

 cent, in order to make a decent net 

 profit. This hair brush costs $1. What 

 price, then, shall we put on it? You 

 understand, of course, that all the fig- 

 ures I have given have been based on 

 sales and not on costs. We must, there- 

 fore, make a gross profit on this brush 

 of 35 per cent, of the selling price. 

 How shall we arrive at this unknown 

 selHng price? Well, this price repre- 

 sents 100 per cent., of which 35 per 

 cent, is profit and the remaining 65 per 

 cent. cost. The problem may then be 

 stated as follows: $1 is to 65 as X is 

 to 100, and the answer is $1.54. In- 

 cidentally, this example teaches us that 

 every article which costs a dollar must 

 be sold at an average price of $1.54 to 

 make a gross profit of 35 per cent, on 

 the selling figure. Does every druggist 

 in the audience to-night know this in- 

 teresting fact? Does everyone know 

 that to realize 35 per cent, on the selling 

 price he has got to realize 54 per cent, 

 on the cost price? 



A Common Sense of Error. 



This brings me incidentally to con- 

 sider for a minute or two the confusion 

 existing in the minds of many merchants 

 between percentages based on costs and 

 on sales. I have already touched upon 

 this phase of the subject in an earlier 

 portion of my address to-night. I have 

 said that a druggist often takes a per- 

 centage calculated from sales and then 

 applies it unthinkingly to costs, thus 

 making a cruel mistake which robs him 

 of his profit entirely. Some years ago 

 the Burroughs Adding Machine Com- 

 pany published an advertisement in one 



