commercial marketing calculation | 9 Exercises

Application: Restaurant Le Palet d'Or

States :

The restaurant Le Palet d'Or wants to increase its profitability by analyzing its costs and margins of its most popular dishes. One of its dishes, filet mignon with mushroom sauce, is sold at €20 including tax. The cost price of this dish is €10. Knowing that the applicable VAT is 10% for catering, the restaurant wants to optimize its pricing strategy and profitability.

Work to do :

1. Calculate the selling price excluding tax of the filet mignon dish.
2. Determine the unit margin excluding tax made on each filet mignon sold.
3. Calculate the margin rate for this dish.
4. Estimate the overall margin if the restaurant sells 150 filet mignon dishes in a week.
5. Analyze the implication of this margin rate on the restaurant's pricing strategy.

Proposed correction:

1. The sales price including VAT is €20. The VAT rate is 10%.
   We use the formula: PV HT = PV TTC ÷ (1 + VAT rate).
   By replacing, we have €20 ÷ (1 + 0,10) = €18,18. The selling price excluding VAT of the dish is therefore €18,18.

2. The unit margin excluding tax is the difference between the selling price excluding tax and the cost price excluding tax: Unit margin = PV excluding tax – PA excluding tax.
   By replacing, €18,18 – €10 = €8,18. The unit margin excluding tax is €8,18.

3. The margin rate is calculated using the formula: ((PV HT – PA HT) ÷ PA HT) x 100.

Substituting, ((€18,18 – €10) ÷ €10) x 100 = 81,8%. The margin rate for filet mignon is 81,8%.

4. The overall margin is given by: Unit margin x Quantity sold.
   By replacing, €8,18 x 150 = €1. The overall margin for 227 dishes sold is €150.

5. A margin rate of 81,8% offers high profitability, which allows the restaurant to review its pricing strategy to potentially attract more customers or invest in other parts of its business.

Formulas Used:

Title	Formulas
Selling price excluding tax	PV incl. VAT ÷ (1 + VAT rate)
Unit margin	PV HT – PA HT
Margin rate	((PV HT – PA HT) ÷ PA HT) x 100
Overall margin	Unit margin x Quantity sold

Application: Chic & Choc Boutique

States :

The clothing store Chic & Choc has just launched a new collection! It includes a winter coat whose purchase price excluding VAT is €75. The sales manager wants to sell it with a brand rate of 35%.

Work to do :

1. Calculate the selling price excluding tax required to achieve a markup rate of 35%.
2. What would be the sales price including tax if the applicable VAT is 20%?
3. Determine the margin rate for this coat.
4. If Chic & Choc sells 50 coats, what is the overall margin generated?
5. Discuss the impact of markup on customer attractiveness.

Proposed correction:

1. Let’s use the formula to find the PV HT: PV HT = PA HT ÷ (1 – Markup rate).
   Substituting, €75 ÷ (1 – 0,35) = €115,38. For a markup rate of 35%, the required selling price excluding VAT is €115,38.

2. To calculate the sales price including tax: VAT inclusive price = VAT exclusive price x (1 + VAT rate).
   By replacing, €115,38 x (1 + 0,20) = €138,46. The sales price including tax is €138,46.

3. The margin rate is given by: ((PV HT – PA HT) ÷ PA HT) x 100.

Substituting, ((€115,38 – €75) ÷ €75) x 100 = 53,84%. The margin rate is 53,84%.

4. The overall margin is calculated by: Unit margin x Quantity sold.
   Substituting, (€115,38 – €75) x 50 = €2. The overall margin for 019 coats is €50.

5. A 35% markup rate makes the coat attractive while maintaining a comfortable margin, which can lead to customer loyalty.

Formulas Used:

Title	Formulas
PV HT	PA HT ÷ (1 – Mark rate)
PV including tax	PV HT x (1 + VAT rate)
Margin rate	((PV HT – PA HT) ÷ PA HT) x 100
Overall margin	Unit margin x Quantity sold

Application: Book & Quill Bookstore

States :

The Livre & Plume bookstore offers a box set of books at a retail price of €45 excluding VAT. The purchase cost excluding VAT for this box set is €30. The bookstore benefits from a 10% discount on its next purchase for any order over 20 units.

Work to do :

1. Determine the unit margin before discount on each box sold.
2. What is the markup rate of the book box set?
3. Calculate the new unit margin if the bookstore orders 25 boxes and applies the discount.
4. If 40 boxes are sold, calculate the total amount generated by the discount.
5. Analyze the relevance of this discount in the bookstore's commercial strategy.

Proposed correction:

1. The unit margin is the difference between the selling price excluding tax and the purchasing price excluding tax: Unit margin = PV excluding tax – PA excluding tax.
   By replacing, €45 – €30 = €15. The unit margin is €15.

2. The mark rate is given by: ((PV HT – PA HT) ÷ PV HT) x 100.
   Substituting, ((€45 – €30) ÷ €45) x 100 = 33,33%. The markup rate is 33,33%.

3. The new PA excluding tax with discount is: €30 x (1 – 0,10) = €27.

The new unit margin is: €45 – €27 = €18. With the discount, the unit margin becomes €18.

4. The total amount generated by the discount on 40 boxes is: €3 x 25 = €75.
   The discount saves €75 in purchase costs if 25 boxes are ordered.

5. The 10% discount improves the unit margin, making this a winning strategy to boost sales through an attractive offer.

Formulas Used:

Title	Formulas
Unit margin	PV HT – PA HT
Brand taxes	((PV HT – PA HT) ÷ PV HT) x 100
New PA HT	PA HT x (1 – Discount rate)
Total amount discounted	Difference per box x Quantity discount

Application: Aromatica Coffee

States :

Café Aromatica is a company specializing in the sale of high-end coffee. It sells a pack of coffee at a selling price excluding tax of €12. The order cost per pack is €7. The company wants to optimize its inventory management by determining the economic quantity to order (EQO).

Work to do :

1. Determine the annual storage cost if the annual demand is 1 packages and the unit storage cost is €000 per package.
2. Calculate the QEC to minimize ordering and storage costs, knowing that the fixed ordering cost is €30 per order.
3. What is the minimum number of orders to be placed in the year from the QEC?
4. Calculate the total cost of inventory management for the year using the QEC.
5. Discuss the strategic impact of optimizing inventory management on Café Aromatica's profitability.

Proposed correction:

1. The annual storage cost is given by: Unit storage cost x Annual demand.
   By replacing, €0,50 x 1 = €000. The annual storage cost is €500.

2. The QEC is calculated by: ?((2 x Annual demand x Ordering cost) ÷ Storage cost).
   Substituting, ?((2 x 1 x 000) ÷ 30) = ?(0,50 ÷ 60) = ?000 = 0,50 packets (rounded up). The QEC is 120 packets.

3. The minimum number of orders is: Annual demand ÷ QEC.

Substituting, 1 ÷ 000 = 346 ? 2,89. It is therefore necessary to place a minimum of 3 orders per year.

4. The total cost of inventory management is: (Ordering cost x Number of orders) + Annual storage cost.
   Replacing, (€30 x 3) + €500 = €90 + €500 = €590. The total inventory management cost is €590.

5. Optimizing inventory management through QEC helps reduce associated costs, thereby increasing Café Aromatica's profitability by minimizing funds tied up in inventory.

Formulas Used:

Title	Formulas
Annual storage cost	Unit storage cost x Annual demand
QEC	?((2 x Annual Demand x Ordering Cost) ÷ Storage Cost)
Number of orders	Annual request ÷ QEC
Cost of inventory management	(Ordering cost x Number of orders) + Annual storage cost

Application: Radiance Beauty Salon

States :

Salon de Beauté Éclat offers an exclusive gift card worth €100 including VAT. The service costs the salon €40 excluding VAT to produce. Given that the applicable VAT is 20%, the salon wants to assess the profitability of this offer.

Work to do :

1. Calculate the selling price excluding tax of the gift card.
2. Determine the unit margin excluding tax made on each gift card sold.
3. Calculate the markup rate for this gift card.
4. What is the total margin if 200 gift cards are sold in the month?
5. Analyze the effect of brand rate on customer perception and loyalty strategy.

Proposed correction:

1. The selling price excluding VAT is calculated by: PV including VAT ÷ (1 + VAT rate).
   By replacing, €100 ÷ (1 + 0,20) = €83,33. The selling price excluding VAT is €83,33.

2. The unit margin excluding VAT is: PV excluding VAT – PA excluding VAT.
   By replacing, €83,33 – €40 = €43,33. The unit margin excluding tax is €43,33.

3. The markup rate is: ((PV HT – PA HT) ÷ PV HT) x 100.

Substituting, ((€83,33 – €40) ÷ €83,33) x 100 = 52%. The markup rate is 52%.

4. The total margin for 200 cards sold is: Unit margin x Quantity sold.
   Substituting, €43,33 x 200 = €8. The total margin is €666.

5. A brand rate of 52% helps attract new customers while consolidating the loyalty of existing customers with a long-term perspective.

Formulas Used:

Title	Formulas
Selling price excluding tax	PV incl. VAT ÷ (1 + VAT rate)
Unit margin	PV HT – PA HT
Brand taxes	((PV HT – PA HT) ÷ PV HT) x 100
Total margin	Unit margin x Quantity sold

Application: Adventure Travel Agency

States :

The Adventure Travel Agency offers an all-inclusive package for an exotic destination. The selling price excluding tax is €1. The cost of purchasing the services sold in the package is €500 excluding tax. The agency plans to sell 1 packages per month.

Work to do :

1. Evaluate the unit margin of this package.
2. Calculate the margin rate achieved on each package sold.
3. Determine the overall margin expected for the month.
4. If the agency increases the selling price excluding tax to €1, what would the new margin rate be?
5. Study the possible impact of this price increase on demand.

Proposed correction:

1. The unit margin is: PV HT – PA HT.
   By replacing, €1 – €500 = €1. The unit margin is €000.

2. The margin rate is: ((PV HT – PA HT) ÷ PA HT) x 100.
   Substituting, ((€1 – €500) ÷ €1) x 000 = 1%. The margin rate is 000%.

3. The overall expected margin is: Unit margin x Quantity sold.

By replacing, €500 x 60 = €30. The overall margin expected is €000.

4. With a new PV excluding tax of €1, the new margin rate is: ((€650 – €1) ÷ €650) x 1 = 000%. The new margin rate is 1%.

5. The increase in the selling price could reduce demand, although the improvement in margins allows flexibility to reinvest in attractive offers or advertising.

Formulas Used:

Title	Formulas
Unit margin	PV HT – PA HT
Margin rate	((PV HT – PA HT) ÷ PA HT) x 100
Overall margin	Unit margin x Quantity sold

Application: Fine Delights Grocery Store

States :

The delicatessen Delices sells a box of luxury chocolates at a retail price of €35 including tax. The purchase cost excluding tax is €20. The applicable VAT is 20%. The grocery store wants to analyze its margins for this reference, but also the potentially strategic impact of packaging improvements.

Work to do :

1. Calculate the selling price excluding tax of the box of chocolates.
2. Determine the unit margin excluding tax achieved.
3. What is the markup rate for this product?
4. If the purchasing cost is reduced by 10% through supplier negotiation, what would the new unit margin be?
5. Consider the strategic implications of this cost reduction on sales.

Proposed correction:

1. The selling price excluding VAT is calculated by: PV including VAT ÷ (1 + VAT rate).
   By replacing, €35 ÷ (1 + 0,20) = €29,17. The selling price excluding VAT is €29,17.

2. The unit margin excluding VAT is: PV excluding VAT – PA excluding VAT.
   By replacing, €29,17 – €20 = €9,17. The unit margin excluding tax is €9,17.

3. The markup rate is: ((PV HT – PA HT) ÷ PV HT) x 100.

Substituting, ((€29,17 – €20) ÷ €29,17) x 100 = 31,47%. The markup rate is 31,47%.

4. With a 10% reduction in the purchase cost, the new HT PA is: €20 x 0,90 = €18.
   The new unit margin is: €29,17 – €18 = €11,17. The new unit margin is €11,17.

5. Reducing the purchase cost increases the unit margin, which makes it possible to offer promotional offers or increase advertising investments.

Formulas Used:

Title	Formulas
Selling price excluding tax	PV incl. VAT ÷ (1 + VAT rate)
Unit margin	PV HT – PA HT
Brand taxes	((PV HT – PA HT) ÷ PV HT) x 100
New PA HT	PA HT x (1 – Reduction percentage)

Application: Ski Station Glisse Alp

States :

The Glisse Alp Ski Resort offers a one-week ski pass sold for €500 including tax. The cost of organizing and accessing the services included is €300 excluding tax. A VAT of 5,5% applies.

Work to do :

1. Calculate the selling price excluding tax of the ski package.
2. Calculate the unit margin excluding tax on this package.
3. What is the margin rate?
4. What would be the total profit if 100 packages are sold in one season?
5. Evaluate the potential impact of increasing VAT to 10%.

Proposed correction:

1. The selling price excluding VAT is calculated by: PV including VAT ÷ (1 + VAT rate).
   By replacing, €500 ÷ (1 + 0,055) = €474,79. The selling price excluding VAT of the package is €474,79.

2. The unit margin is: PV HT – PA HT.
   By replacing, €474,79 – €300 = €174,79. The unit margin on the package is €174,79.

3. The margin rate is: ((PV HT – PA HT) ÷ PA HT) x 100.

Substituting, ((€474,79 – €300) ÷ €300) x 100 = 58,26%. The margin rate is 58,26%.

4. The total profit for 100 packages is: Unit margin x Quantity sold.
   Substituting, €174,79 x 100 = €17. The total gain is €479.

5. An increase in VAT to 10% could reduce the economic attractiveness of the package if the price including VAT is adjusted upwards, requiring a reassessment of the pricing strategy.

Formulas Used:

Title	Formulas
Selling price excluding tax	PV incl. VAT ÷ (1 + VAT rate)
Unit margin	PV HT – PA HT
Margin rate	((PV HT – PA HT) ÷ PA HT) x 100
Total gain	Unit margin x Quantity sold

Application: TechnoGadget Company

States :

TechnoGadget introduces a new electronic device to the market. The target selling price excluding VAT is €250. The production cost is €180 excluding VAT. The company wants to analyze their pricing policy and evaluate different strategic options.

Work to do :

1. Determine the unit margin excluding VAT.
2. Calculate the markup rate achieved.
3. What would be the overall profitability if 1 units are sold?
4. If the selling price excluding VAT is reduced to €230, what impact on the mark-up rate?
5. Consider the strategic implications of this price reduction.

Proposed correction:

1. The unit margin is: PV HT – PA HT.
   By replacing, €250 – €180 = €70. The unit margin excluding tax is €70.

2. The markup rate is: ((PV HT – PA HT) ÷ PV HT) x 100.
   Substituting, ((€250 – €180) ÷ €250) x 100 = 28%. The markup rate achieved is 28%.

3. The overall profitability per 1 units is: Unit margin x Quantity sold.

By replacing, €70 x 1 = €000. The overall profitability is €70.

4. With a reduced PV excluding tax of €230, the new markup rate is: ((€230 – €180) ÷ €230) x 100 = 21,74%. The markup rate drops to 21,74%.

5. Reducing the selling price could boost sales volume, but also require effectively increasing distribution levels to compensate for the reduced unit margin.

Formulas Used:

Title	Formulas
Unit margin	PV HT – PA HT
Brand taxes	((PV HT – PA HT) ÷ PV HT) x 100
Overall profitability	Unit margin x Quantity sold