Ok, for the life of me I can’t figure this out. I know that I suck at maths, but this is really bugging me, which is why I am throwing it out there for the geniuses here on the SDMB.

We sell advertising in a magazine.
A full page advert costs $4395.
We received an order from an ad agency stating that their charge to their client is $5170.60.
The agency fee is 15%.
15% of $4395 is $659.25.
If you add that to $4395 then you get $5054.25.
15% of $5170.60 is $775.59 and when you subtract that from $5170.60 you get $4395.01.

This way the agency gets 15% of the higher figure instead of the lower figure. What I can’t figure out is how they arrive at the higher figure in the first place. I know it’s probably really simple but would someone please explain it to me.

well, if they are maing 15% on it then the cost to them needs to be 85% of the amount they charge so you take the original amount, divide it by 85 then multiply it by 100. Im sure theres a more acceptable way to show this but im willing to bet this is the method they use in the office

It seems to me that they deliberately solved for whatever number would allow them to take 15% off the top and still have the cost of the ad left over. In other words, they said, “Okay, we need to charge $x such that x - .15x = .85x = 4395,” and then solve for x.

It’s just a way for the agency to ramp up their fees while still being able to claim it’s 15%. Seems pretty nasty to me. If I were the one paying them I wouldn’t be giving them a cent more than $5054.25.

Unless Dead Cat’s posting is a whoosh, audiobottle has the correct solution.

Let’s suppose this is a salary question and employee X makes $4,395 after 15% tax. What is the gross pay?
Gross Pay = .15* Gross Pay + Net Pay
.85*Gross Pay = $4,395 (Net Pay)
Gross Pay = 4,395/.85
Gross Pay = 5,170.59

I wasn’t whooshing, but I may be being whooshed. I entirely agree with Al128. I also realise that audiobottle provided the OP with the answer they were looking for (it’s the OP that’s getting paid, not charged), I was just making a further comment to the effect that I thought what the agency is doing (nothing to do with the OP) is shitty business. It’s not like being taxed on salary, it’s a charge for a service. The service costs X, so the commission charged by the agency should be 0.15 * X, not X/0.85 - X. IMHO :).

When I used to work for a heavy equipment dealer, we marked up the price of parts 35%. That is, we divided the retailer price by .65 to get the customer price. When I questioned this, I was given the “This pays your salary” admonition.

Dead Cat
Sorry for saying you were whooshing. :smack:
I wasn’t being critical of your calculations, it just *seemed *(to me) your posting was indignant in a humorous kind of way.

(harumph mine).

Yes, I say you are right - that company is sleazy and they are charging more than 15%. (I’ve got to make fewer postings from work).