A^nuaryPi907.m'}    Four  Things  Every  Druggist  Should  Know.  13 
WHAT  THE  NET  PROFITS  OUGHT  TO  BE. 
In  general  it  may  be  said  that  there  ought  to  be  a  difference  of 
at  least  ten  per  cent,  between  the  percentage  expense  and  the  gross 
profit — and  the  ideal  should  be  to  attain  as  nearly  to  the  fifteen  per 
cent,  mark  as  possible.  The  average  expense  of  the  average  drug- 
gist is  about  30  per  cent.  The  average  gross  profit  is  about  40  per 
cent.  If  the  expenses  can  be  screwed  down  a  point  or  two,  or  the 
profit  screwed  up,  or  if  both  feats  can  be  performed,  so  much  the 
better.  But  at  the  least  the  two  factors  should  be  kept  at  the 
respectable  distance  apart  of  ten  points.  As  a  drug  business  gets 
up  into  fifteen  or  eighteen  or  twenty  thousand  dollars  a  year,  it  ought 
to  be  practicable  in  most  cases  to  have  a  percentage  expense  not 
greater  than  23  or  25,  and  in  the  smaller  towns  a  point  lower  down 
than  that  can  be  reached. 
If  the  facts  could  be  known,  I  have  no  doubt  that  many  druggists 
would  find  to  their  great  surprise  that  they  were  actually  making 
much  less  than  10  per  cent.  net.  A  Chicago  druggist,  recently  per- 
suaded to  estimate  his  percentage  expense  and  his  gross  profit,  was 
chagrined  to  discover  that  one  was  32  per  cent,  and  the  other  36 
percent.  Once  in  possession  of  the  facts  he  was  in  position  to  apply 
corrective  agencies  wherever  possible,  and  I  venture  to  say  that  he 
will  never  again  be  lulling  himself  to  sleep  in  the  fool's  paradise 
from  which  he  was  so  grateful  to  escape. 
Now  it  must  be  understood  that  everything  I  have  said  and  shall 
say  about  gross  profits  has  reference  to  the  profit  on  the  sale  price 
instead  of  the  cost  price.  Expenses  are  always  estimated  on  sales, 
and  profits  ought  to  be  estimated  on  them  also  in  order  to  permit  of 
ready  comparisons  on  the  same  basis.  There  is  a  chance  for  con- 
fusion here  and  the  point  ought  to  be  clearly  realized.  Suppose  you 
pay  $1  for  a  certain  product  and  you  desire  to  make  35  percent,  on 
it  gross.  If  you  make  the  mistake  of  adding  this  35  per  cent,  to  the 
cost  price  you  will  sell  the  article  for  $1.35.  Now  it  will  cost  you, 
let  us  say,  28  per  cent,  of  the  selling  price  to  handle  the  article, 
which  amounts  to  39.2  cents,  so  that  while  you  think  you  are  mak- 
ing a  net  profit  of  7  per  cent.,  you  are  actually  losing  4.2  cents  on 
the  transaction ! 
In  this  connection  a  few  rules  may  be  of  assistance.  In  order  to 
make  a  profit  of  16%  per  cent,  on  the  sale  price,  add  20  per  cent. 
