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Profits Using Part Exchange
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Profits Using Part Exchange
So ok you have a shop in the high street that you got cheap because of
the recession and you want to maximise profits. One way of doing this
is by offering part exchange deals.
This is where a customer wants to buy an item from your shop, and they
have an item that is related to the market that your shop is serving.
By allowing part exchanges on goods you stimulate trade and also
replenish stock at £0 cost!
My reasoning for the previous underlined statement goes like this:
First item value = £60 at cost, retails at £100.
Part ex item s/h value = £70. Part ex allowance =
£35 Profit = £5 cash + one item worth s/h
£70.
Now it could be argued that the item that you have taken in part
exchange hasn’t cost you a penny, because, I believe (and
please correct me if I’m wrong) that for accounting purposes,
the deal that you have done is actually two separate deals.
In the first deal you have bought an item for £60 and sold it
for £65, showing a £5 profit. The second deal is
the ‘part ex’ item that you have bought for
£0 and is now worth £70 at second hand value.
Now! when you sell the ‘part ex’ item you have made
100% profit!! If you manage to sell the item that you have just
'bought' for £0, and you in turn take a part exchange on it
at the point of sale, then the scenario gets even more interesting.
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