Summary
Application: Flavors of the World
States :
The company "Saveurs du Monde" specializing in exotic spices, is looking to optimize its pricing strategy. It sells a rare spice at a selling price excluding tax of €50 per unit. The purchase cost excluding tax is €30 and it currently sells 200 units per month. The company wants to know its margins and think about a possible increase in its turnover by slightly modifying the selling price.
Work to do :
- Calculate the unit margin made by “Saveurs du Monde” on the sale of its rare spice.
- Determine the current margin rate for this spice.
- What is the current monthly turnover achieved by the company with this spice?
- Calculate the overall margin made monthly thanks to this spice.
- If the company wants to increase its monthly turnover by 10% while keeping the same quantity sold, what should the new selling price excluding tax be?
Proposed correction:
-
Unit margin = PV HT – PA HT = 50 – 30 = 20 €.
The unit margin achieved is €20. -
Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100 = ((50 – 30) ÷ 30) x 100 = 66,67%.
The current margin rate is 66,67%. -
Monthly turnover = PV HT x Quantity sold = 50 x 200 = €10.
The current monthly turnover is €10.
-
Overall margin = Unit margin x Quantity sold = 20 x 200 = €4.
The overall margin achieved monthly is €4. -
For a 10% increase, new turnover = 10 x 000 = €1,10.
New selling price excluding VAT = New turnover ÷ Quantity sold = 11 ÷ 000 = €200.
The new selling price excluding VAT should be €55 to achieve this objective.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | PV HT – PA HT |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Monthly turnover | PV HT x Quantity sold |
| Overall margin | Unit margin x Quantity sold |
| New selling price excluding VAT | New turnover ÷ Quantity sold |
Application: Tech-Innovate
States :
"Tech-Innovate", a high-tech solutions company, launches a new gadget. The proposed selling price excluding VAT is €120, while the manufacturing cost excluding VAT is €80. The company plans to sell 500 units per quarter. In order to evaluate its performance, the company wants to analyze its margins and study the effects of a 5% discount on the selling price in order to stimulate sales.
Work to do :
- Calculate the unit margin on this gadget.
- Determine the current markup rate of the gadget.
- What is the anticipated quarterly revenue from the sale of this gadget?
- Calculate the expected quarterly overall margin.
- Estimate the new quarterly revenue if a 5% discount is applied to the selling price, while increasing sales by 10%.
Proposed correction:
-
Unit margin = PV HT – PA HT = 120 – 80 = 40 €.
The unit margin is €40. -
Mark rate = ((PV HT – PA HT) ÷ PV HT) x 100 = ((120 – 80) ÷ 120) x 100 = 33,33%.
The current markup rate is 33,33%. -
Quarterly turnover = PV excluding VAT x Quantity sold = 120 x 500 = €60.
The anticipated quarterly turnover is €60.
-
Quarterly overall margin = Unit margin x Quantity sold = 40 x 500 = €20.
The overall quarterly margin expected is €20. -
New PV excluding tax after discount = 120 x (1 – 0,05) = €114.
New quantity sold = 500 x 1,10 = 550 units.
New turnover = 114 x 550 = €62.
With the discount and increased sales, the new quarterly turnover would be €62.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | PV HT – PA HT |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
| Quarterly turnover | PV HT x Quantity sold |
| Quarterly overall margin | Unit margin x Quantity sold |
| New PV excluding VAT after discount | PV HT x (1 – discount) |
| New turnover | New PV HT x New quantity sold |
Application: Urban Fashion
States :
The boutique "Mode Urbain" offers trendy clothing. Currently, it sells a remarkable jacket at a selling price excluding tax of €90. The purchase cost excluding tax is €60, and the sales volume is 300 jackets per season. The boutique plans to expand its range by increasing prices while maintaining an attractive margin.
Work to do :
- Calculate the unit margin on the sale of this jacket.
- Determine the margin rate for this product.
- Calculate the seasonal turnover for these jackets.
- Calculate the current seasonal overall margin.
- If "Urban Fashion" decides to increase the selling price excluding tax by 10%, how many jackets must they sell to maintain the same overall margin?
Proposed correction:
-
Unit margin = PV HT – PA HT = 90 – 60 = 30 €.
The unit margin is €30. -
Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100 = ((90 – 60) ÷ 60) x 100 = 50%.
The margin rate is 50%. -
Seasonal turnover = PV excluding VAT x Quantity sold = 90 x 300 = €27.
The seasonal turnover is €27.
-
Overall seasonal margin = Unit margin x Quantity sold = 30 x 300 = €9.
The current seasonal overall margin is €9. -
New PV excluding tax = 90 x (1 + 0,10) = €99.
Quantity for same overall margin = Overall margin ÷ New unit margin.
New unit margin = 99 – 60 = €39.
Quantity = 9 ÷ 000 ? 39 jackets.
To maintain the same overall margin, 231 jackets would have to be sold at the new price.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | PV HT – PA HT |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Seasonal turnover | PV HT x Quantity sold |
| Seasonal overall margin | Unit margin x Quantity sold |
| New PV HT after increase | PV HT x (1 + increase) |
| Quantity for same overall margin | Overall Margin ÷ New Unit Margin |
Application: EcoloBricoles
States :
The company "ÉcoloBricoles" specializes in eco-friendly products for the home. It sells a modular shelf made of recycled wood at a selling price excluding tax of €45. The production cost excluding tax is €25, and it is expected to sell 600 units per year. The company wants to review its pricing strategies to improve its competitiveness on the market.
Work to do :
- Calculate the unit margin achieved on each shelf.
- Determine the margin rate for this shelf.
- What is the expected annual turnover for the shelf?
- Calculate the expected annual overall margin of this shelf.
- If “ÉcoloBricoles” wants to increase the margin rate to 50%, what should the new selling price excluding tax be?
Proposed correction:
-
Unit margin = PV HT – PA HT = 45 – 25 = 20 €.
The unit margin made on each shelf is €20. -
Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100 = ((45 – 25) ÷ 25) x 100 = 80%.
The margin rate for this shelf is 80%. -
Annual turnover = PV excluding VAT x Quantity sold = 45 x 600 = €27.
The expected annual turnover is €27.
-
Annual overall margin = Unit margin x Quantity sold = 20 x 600 = €12.
The expected annual overall margin is €12. -
To obtain a margin rate of 50%, Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
By isolating PV HT, we obtain: PV HT = PA HT + (Margin rate x PA HT ÷ 100).
PV excluding tax = 25 + (50 x 25 ÷ 100) = €37,5.
The solution shows a problem because the margin rate is well below the initial desire. This indicates that an increase is not necessary since the margin is already 80%.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | PV HT – PA HT |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Annual sales | PV HT x Quantity sold |
| Annual overall margin | Unit margin x Quantity sold |
| New PV HT desired | PA HT + (Margin rate x PA HT ÷ 100) |
Application: HealthPlus
States :
"SantéPlus" is a growing health and wellness company. It recently developed an essential oil that sells for €60 excluding VAT, with a production cost excluding VAT of €40. The company plans to distribute 800 units per semester. To stand out in this competitive market, it is considering changing its price.
Work to do :
- Calculate the unit margin on each bottle of oil.
- Determine the brand rate of this essential oil.
- Calculate the expected half-yearly revenue with this product.
- Calculate the overall half-yearly margin expected for “SantéPlus”.
- Analyze the impact on sales if the company wants to reduce the selling price excluding VAT by 10% to increase its market share.
Proposed correction:
-
Unit margin = PV HT – PA HT = 60 – 40 = 20 €.
The unit margin per bottle is €20. -
Mark rate = ((PV HT – PA HT) ÷ PV HT) x 100 = ((60 – 40) ÷ 60) x 100 = 33,33%.
The mark rate of essential oil is 33,33%. -
Half-yearly turnover = PV excluding VAT x Quantity sold = 60 x 800 = €48.
The expected half-yearly turnover is €48.
-
Half-yearly overall margin = Unit margin x Quantity sold = 20 x 800 = €16.
The overall half-yearly margin expected is €16. -
New selling price excluding VAT = 60 x (1 – 0,10) = €54.
To estimate the possible increase in sales, it would be necessary to analyze the price perceived by customers and the elasticity of demand, which cannot be calculated here without additional data. However, reducing the price by 10% could increase market share if demand is elastic with respect to price.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | PV HT – PA HT |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
| Half-year turnover | PV HT x Quantity sold |
| Half-yearly overall margin | Unit margin x Quantity sold |
| New selling price excluding VAT | PV HT x (1 – reduction) |
Application: Garden of Eden
States :
"Jardin d'Éden" is an innovative nursery that sells urban gardening kits. Each kit is sold for €85 excluding VAT with a cost price excluding VAT of €50. The store plans to sell 400 kits during the year. In order to encourage the adoption of these kits, it is considering promotions.
Work to do :
- Calculate the unit margin generated by each kit.
- Determine the margin rate of this gardening kit.
- Calculate the expected annual turnover for this visit.
- Calculate the estimated annual overall margin.
- Estimate the total sales amount if a 15% off sale price promotion boosts sales by 25%.
Proposed correction:
-
Unit margin = PV HT – PA HT = 85 – 50 = 35 €.
The unit margin generated by each kit is €35. -
Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100 = ((85 – 50) ÷ 50) x 100 = 70%.
The margin rate of this kit is 70%. -
Annual turnover = PV excluding VAT x Quantity sold = 85 x 400 = €34.
The expected annual turnover is €34.
-
Annual overall margin = Unit margin x Quantity sold = 35 x 400 = €14.
The estimated annual overall margin is €14. -
New PV excluding tax = 85 x (1 – 0,15) = €72,25.
New quantity sold = 400 x 1,25 = 500 units.
New turnover = 72,25 x 500 = €36.
With the promotion, total sales would amount to €36.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | PV HT – PA HT |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Annual sales | PV HT x Quantity sold |
| Annual overall margin | Unit margin x Quantity sold |
| New PV HT with promotion | PV HT x (1 – promotion) |
| New turnover | New PV HT x New quantity sold |
Application: Fusion Cuisine
States :
Cuisine Fusion offers innovative cooking classes. Each class is priced at €100 excluding VAT with service costs excluding VAT of €30. The company anticipates 200 registrations per quarter. To make the offer even more attractive, it is considering adjusting its margin rate.
Work to do :
- Calculate the unit margin per course.
- Determine the markup rate of the current price of Fusion Cuisine courses.
- What is the expected quarterly revenue for these offers?
- Calculate the quarterly overall margin.
- What should the selling price excluding VAT be if the company wants to reduce its markup rate to 25%?
Proposed correction:
-
Unit margin = PV HT – PA HT = 100 – 30 = 70 €.
The unit margin per course is €70. -
Mark rate = ((PV HT – PA HT) ÷ PV HT) x 100 = ((100 – 30) ÷ 100) x 100 = 70%.
The markup rate of the current price is 70%. -
Quarterly turnover = PV excluding VAT x Quantity sold = 100 x 200 = €20.
The expected quarterly turnover is €20.
-
Quarterly overall margin = Unit margin x Quantity sold = 70 x 200 = €14.
The overall quarterly margin is €14. -
For a markup rate of 25%, Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100.
PV HT = PA HT ÷ (1 – Markup rate) = 30 ÷ (1 – 0,25) = €40.
The selling price excluding tax should be €40 for a mark-up rate of 25%.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | PV HT – PA HT |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
| Quarterly turnover | PV HT x Quantity sold |
| Quarterly overall margin | Unit margin x Quantity sold |
| New PV HT desired | PA HT ÷ (1 – Mark rate) |
Application: Thumbnails Collection
States :
The company "Vignettes Collection" produces and sells collector's albums. The selling price excluding VAT is set at €15, while the production cost excluding VAT is €9. The shop plans to sell 1 albums per year. They plan to expand their market by introducing a new album format, while still wanting to maintain a lucrative business.
Work to do :
- Calculate the unit margin for each album.
- What is the markup rate on each album sold?
- Calculate the expected annual turnover of this collection.
- Calculate the annual overall margin.
- If the store wants to offer a 20% discount on the new format to attract customers, what impact will this have on the unit margin?
Proposed correction:
-
Unit margin = PV HT – PA HT = 15 – 9 = 6 €.
The unit margin for each album is €6. -
Mark rate = ((PV HT – PA HT) ÷ PV HT) x 100 = ((15 – 9) ÷ 15) x 100 = 40%.
The markup rate on each album is 40%. -
Annual turnover = PV excluding VAT x Quantity sold = 15 x 1 = €500.
The expected annual turnover is €22.
-
Annual overall margin = Unit margin x Quantity sold = 6 x 1 = €500.
The annual overall margin is €9. -
New PV excluding tax after reduction = 15 x (1 – 0,20) = €12.
New unit margin = 12 – 9 = €3.
The impact of the 20% reduction on the selling price would reduce the unit margin to €3.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | PV HT – PA HT |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
| Annual sales | PV HT x Quantity sold |
| Annual overall margin | Unit margin x Quantity sold |
| New PV HT with reduction | PV HT x (1 – reduction) |
| New unit margin | New PV HT – PA HT |
Application: Gourmet Deluxe
States :
"Gourmet Deluxe" is known for its gourmet boxes. The selling price excluding VAT is €150 and the production cost excluding VAT is €100. The company plans to sell 300 boxes per quarter and wants to assess the potential impact of introducing new, more attractive packaging which would lead to a reduction in margin.
Work to do :
- Determine the current unit margin of each box.
- Calculate the margin rate of existing boxes.
- Calculate the current expected quarterly revenue.
- Calculate the targeted quarterly overall margin.
- With an additional cost of €10 for the new packaging, what will the new margin rate be?
Proposed correction:
-
Unit margin = PV HT – PA HT = 150 – 100 = 50 €.
The current unit margin is €50. -
Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100 = ((150 – 100) ÷ 100) x 100 = 50%.
The margin rate for the boxes is 50%. -
Quarterly turnover = PV excluding VAT x Quantity sold = 150 x 300 = €45.
The current expected quarterly turnover is €45.
-
Quarterly overall margin = Unit margin x Quantity sold = 50 x 300 = €15.
The targeted quarterly overall margin is €15. -
New production cost = 100 + 10 = €110.
New margin rate = ((PV HT – New production cost) ÷ New production cost) x 100 = ((150 – 110) ÷ 110) x 100 = 36,36%.
With the new packaging, the margin rate will be 36,36%.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | PV HT – PA HT |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Quarterly turnover | PV HT x Quantity sold |
| Quarterly overall margin | Unit margin x Quantity sold |
| New margin rate | ((PV HT – New production cost) ÷ New production cost) x 100 |