Summary
Application: Local Delights
States :
Les Délices du Terroir is a company specializing in the sale of regional gastronomic products. It wishes to analyze its activities in order to optimize its profitability. You have the following information for a flagship product:
- Unit purchase cost: €8 excluding VAT
- Unit sale price: €15 excluding VAT
- Quantity sold: 500 units
Work to do :
- Calculate the unit margin of this product.
- Determine the overall margin made on this product.
- Establish the margin rate.
- Analyze the markup rate.
- What advice would you give to the company given the margin rate obtained?
Proposed correction:
-
The unit margin is obtained by subtracting the purchase cost from the selling price: €15 – €8 = €7.
The unit margin for this product is €7. -
The overall margin is obtained by multiplying the unit margin by the quantity sold: €7 x 500 = €3.
The overall margin achieved is €3. -
The margin rate is calculated using the formula: ((PV HT – PA HT) ÷ PA HT) x 100.
Substituting, ((15 – 8) ÷ 8) x 100 = 87,5%.
The margin rate is 87,5%.
-
The markup rate is given by the formula ((PV HT – PA HT) ÷ PV HT) x 100.
Substituting, ((15 – 8) ÷ 15) x 100 = 46,67%.
The markup rate is 46,67%. -
With a margin rate of 87,5%, the company has a high profitability on this product. It could consider increasing its quantity of products sold to maximize its profits.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | PV HT – PA HT |
| Overall margin | Unit margin x Quantity sold |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
Application: TechnoGadgets
States :
TechnoGadgets is an innovative company specializing in the online sale of high-tech products. It wants to evaluate its sales performance for a recently launched product. Here is the available data:
- Unit purchase cost: €40 excluding VAT
- Unit sale price: €70 excluding VAT
- Quantity sold: 1 units
Work to do :
- Calculate the unit margin of this product.
- Determine the overall margin made on this product.
- Establish the margin rate.
- Analyze the markup rate.
- Considering the markup rate, what would you suggest to improve the pricing strategy?
Proposed correction:
-
The unit margin is calculated by subtracting the purchase cost from the selling price: €70 – €40 = €30.
The unit margin for this product is €30. -
The overall margin is obtained by multiplying the unit margin by the quantity sold: €30 x 1 = €200.
The overall margin achieved is €36. -
The margin rate is calculated using the formula: ((PV HT – PA HT) ÷ PA HT) x 100.
Substituting, ((70 – 40) ÷ 40) x 100 = 75%.
The margin rate is 75%.
-
The markup rate is given by the formula ((PV HT – PA HT) ÷ PV HT) x 100.
Substituting, ((70 – 40) ÷ 70) x 100 = 42,86%.
The markup rate is 42,86%. -
The markup rate of 42,86% is interesting. TechnoGadgets could consider promotions to boost sales and increase its overall volume.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | PV HT – PA HT |
| Overall margin | Unit margin x Quantity sold |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
Application: Green Baskets
States :
Les Paniers Verts is a company that distributes organic fruits and vegetables. Wanting to adjust its pricing strategies, the company analyzes one of its batches:
- Unit purchase cost: €2,50 excluding VAT
- Unit sale price: €5 excluding VAT
- Quantity sold: 800 units
Work to do :
- Calculate the unit margin of this lot.
- Determine the overall margin made on this lot.
- Establish the margin rate.
- Brand rate analysis.
- How could the company optimize its profitability from the results?
Proposed correction:
-
The unit margin is obtained by subtracting the purchase cost from the selling price: €5 – €2,50 = €2,50.
The unit margin for this lot is €2,50. -
The overall margin is obtained by multiplying the unit margin by the quantity sold: €2,50 x 800 = €2.
The overall margin achieved is €2. -
The margin rate is calculated using the formula: ((PV HT – PA HT) ÷ PA HT) x 100.
Substituting, ((5 – 2,50) ÷ 2,50) x 100 = 100%.
The margin rate is 100%.
-
The markup rate is given by the formula ((PV HT – PA HT) ÷ PV HT) x 100.
Substituting, ((5 – 2,50) ÷ 5) x 100 = 50%.
The markup rate is 50%. -
With a margin rate of 100%, Les Paniers Verts could expand its distribution to increase its turnover while keeping an eye on variable costs.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | PV HT – PA HT |
| Overall margin | Unit margin x Quantity sold |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
Application: EcoVetements
States :
EcoVetements, an ethical fashion company, is looking to determine its financial returns on a collection of eco-friendly t-shirts. Here are some things to consider:
- Unit purchase cost: €12 excluding VAT
- Unit sale price: €25 excluding VAT
- Quantity sold: 600 units
Work to do :
- Calculate the unit margin for this collection.
- Estimate the overall margin generated by the sale of this collection.
- Establish the margin rate.
- Interpret the mark rate obtained.
- What development could you propose to EcoVetements to improve its profitability?
Proposed correction:
-
The unit margin is obtained by subtracting the purchase cost from the selling price: €25 – €12 = €13.
The unit margin for this collection is €13. -
The overall margin is obtained by multiplying the unit margin by the quantity sold: €13 x 600 = €7.
The overall margin achieved is €7. -
The margin rate is calculated using the formula: ((PV HT – PA HT) ÷ PA HT) x 100.
Substituting, ((25 – 12) ÷ 12) x 100 = 108,33%.
The margin rate is 108,33%.
-
The markup rate is given by the formula ((PV HT – PA HT) ÷ PV HT) x 100.
Substituting, ((25 – 12) ÷ 25) x 100 = 52%.
The markup rate is 52%. -
EcoVetements enjoys a good margin. The company could consider expanding its product range while keeping production costs low to boost its profitability.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | PV HT – PA HT |
| Overall margin | Unit margin x Quantity sold |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
Application: SantéNature
States :
SantéNature is a company dedicated to natural food supplements. In order to better understand their profitability, you are invited to analyze some data on a flagship product:
- Unit purchase cost: €10 excluding VAT
- Unit sale price: €22 excluding VAT
- Quantity sold: 1 units
Work to do :
- Calculate the unit margin of this product.
- Determine the overall margin made on this product.
- Calculate the margin rate.
- Analyze the markup rate.
- What would you recommend to SantéNature regarding their pricing strategy?
Proposed correction:
-
The unit margin is obtained by subtracting the purchase cost from the selling price: €22 – €10 = €12.
The unit margin for this product is €12. -
The overall margin is obtained by multiplying the unit margin by the quantity sold: €12 x 1 = €000.
The overall margin achieved is €12. -
The margin rate is calculated using the formula: ((PV HT – PA HT) ÷ PA HT) x 100.
Substituting, ((22 – 10) ÷ 10) x 100 = 120%.
The margin rate is 120%.
-
The markup rate is given by the formula ((PV HT – PA HT) ÷ PV HT) x 100.
Substituting, ((22 – 10) ÷ 22) x 100 = 54,55%.
The markup rate is 54,55%. -
The good margin and brand ratio gives SantéNature some room to maneuver. The company could consider marketing initiatives or price cuts to further boost sales, while maintaining profitability.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | PV HT – PA HT |
| Overall margin | Unit margin x Quantity sold |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
Application: JardinBio
States :
JardinBio, an innovative company specializing in sustainable gardening, is evaluating the potential of some of its sales. Here is the context regarding a flagship product:
- Unit purchase cost: €18 excluding VAT
- Unit sale price: €35 excluding VAT
- Quantity sold: 400 units
Work to do :
- Calculate the unit margin of this product.
- Determine the overall margin achieved.
- Establish the margin rate.
- Analyze the markup rate.
- What price adjustments do you recommend for this company?
Proposed correction:
-
The unit margin is obtained by subtracting the purchase cost from the selling price: €35 – €18 = €17.
The unit margin for this product is €17. -
The overall margin is obtained by multiplying the unit margin by the quantity sold: €17 x 400 = €6.
The overall margin achieved is €6. -
The margin rate is calculated using the formula: ((PV HT – PA HT) ÷ PA HT) x 100.
Substituting, ((35 – 18) ÷ 18) x 100 = 94,44%.
The margin rate is 94,44%.
-
The markup rate is given by the formula ((PV HT – PA HT) ÷ PV HT) x 100.
Substituting, ((35 – 18) ÷ 35) x 100 = 48,57%.
The markup rate is 48,57%. -
The margin rate is already satisfactory. JardinBio could take advantage of the data by remaining attentive to market trends, in order to adjust their pricing and maintain healthy profitability.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | PV HT – PA HT |
| Overall margin | Unit margin x Quantity sold |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
Application: Fitness & Well-being
States :
Forme & Bien-être, a key player in the sports and fitness sector, is looking to improve its financial performance across a range of products. Information relating to a specific program:
- Unit purchase cost: €65 excluding VAT
- Unit sale price: €145 excluding VAT
- Quantity sold: 150 units
Work to do :
- Calculate the unit margin of the program.
- Estimate the overall margin generated.
- Determine the margin rate.
- Interpret the mark rate.
- What strategies could Forme & Bien-être adopt to increase its profits?
Proposed correction:
-
The unit margin is obtained by subtracting the purchase cost from the selling price: €145 – €65 = €80.
The unit margin for this program is €80. -
The overall margin is obtained by multiplying the unit margin by the quantity sold: €80 x 150 = €12.
The overall margin achieved is €12. -
The margin rate is calculated using the formula: ((PV HT – PA HT) ÷ PA HT) x 100.
Substituting, ((145 – 65) ÷ 65) x 100 = 123,08%.
The margin rate is 123,08%.
-
The markup rate is given by the formula ((PV HT – PA HT) ÷ PV HT) x 100.
Substituting, ((145 – 65) ÷ 145) x 100 = 55,17%.
The markup rate is 55,17%. -
Forme & Bien-être has a comfortable margin. Diversifying the offer or engaging in promotional campaigns could strengthen their positioning and boost sales.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | PV HT – PA HT |
| Overall margin | Unit margin x Quantity sold |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
Application: Flavors of the World
States :
Saveurs du Monde, an international gastronomy company, evaluates the performance of its signature dishes. The following data is available:
- Unit purchase cost: €7 excluding VAT
- Unit sale price: €18 excluding VAT
- Quantity sold: 2 units
Work to do :
- Calculate the unit margin of the dish.
- Determine the overall margin obtained.
- Establish the margin rate.
- Analyze the markup rate.
- What action could improve the success of signature dishes?
Proposed correction:
-
The unit margin is obtained by subtracting the purchase cost from the selling price: €18 – €7 = €11.
The unit margin for this dish is €11. -
The overall margin is obtained by multiplying the unit margin by the quantity sold: €11 x 2 = €000.
The overall margin achieved is €22. -
The margin rate is calculated using the formula: ((PV HT – PA HT) ÷ PA HT) x 100.
Substituting, ((18 – 7) ÷ 7) x 100 = 157,14%.
The margin rate is 157,14%.
-
The markup rate is given by the formula ((PV HT – PA HT) ÷ PV HT) x 100.
Substituting, ((18 – 7) ÷ 18) x 100 = 61,11%.
The markup rate is 61,11%. -
The high margin offers good prospects. Saveurs du Monde could accentuate the differentiation of its dishes by exploiting more communication on the quality and origin of the ingredients.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | PV HT – PA HT |
| Overall margin | Unit margin x Quantity sold |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
Application: ArtiCentre
States :
ArtiCentre, a space dedicated to artistic crafts, wants to evaluate the profitability of its unique creations. Here is the information you have:
- Unit purchase cost: €150 excluding VAT
- Unit sale price: €320 excluding VAT
- Quantity sold: 50 units
Work to do :
- Calculate the unit margin of each creation.
- Evaluate the overall margin obtained from the sale of the creations.
- Calculate the margin rate.
- Understand the markup rate from the data.
- What could ArtiCentre do to optimize its sales?
Proposed correction:
-
The unit margin is obtained by subtracting the purchase cost from the selling price: €320 – €150 = €170.
The unit margin for each creation is €170. -
The overall margin is obtained by multiplying the unit margin by the quantity sold: €170 x 50 = €8.
The overall margin achieved is €8. -
The margin rate is calculated using the formula: ((PV HT – PA HT) ÷ PA HT) x 100.
Substituting, ((320 – 150) ÷ 150) x 100 = 113,33%.
The margin rate is 113,33%.
-
The markup rate is given by the formula ((PV HT – PA HT) ÷ PV HT) x 100.
Substituting, ((320 – 150) ÷ 320) x 100 = 53,13%.
The markup rate is 53,13%. -
ArtiCentre enjoys good profitability. The company could further explore exhibitions and events to promote awareness and encourage sales.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | PV HT – PA HT |
| Overall margin | Unit margin x Quantity sold |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |