Summary
Application: The Gourmet Spike
States :
L'Épi Gourmand, an artisanal bakery and pastry shop, wants to review its pricing strategy in order to improve its margins. It sells an average of 150 baguettes per day, with a sales price excluding tax (SPT) of €1,00 and a purchase price excluding tax (PPT) of €0,60. It is questioning various aspects of its pricing and wants to explore ways to improve its financial results.
Work to do :
- Calculate the unit margin (in €) made on each baguette.
- Determine the current margin rate on baguettes.
- What should the new PV HT be to obtain a margin rate of 40%?
- Calculate the overall margin made in one month (30 days) on baguettes.
- Analyze the impact of a €0,20 increase in the PV excluding tax on the markup rate.
Proposed correction:
-
Unit margin = PV excluding tax – PA excluding tax
= €1,00 – €0,60
= 0,40 €.
Each baguette therefore generates a unit margin of €0,40. -
Margin rate = ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100
= ((€1,00 – €0,60) ÷ €0,60) x 100
= (€0,40 ÷ €0,60) x 100
= 66,67%.
The current margin rate on baguettes is 66,67%. -
New PV HT = PA HT ÷ (1 – Desired margin rate)
= 0,60 € ÷ (1 – 0,40)
= 0,60 € ÷ 0,60
= 1,00 €.
To obtain a margin rate of 40%, the net sales value of the baguettes should be €1,00.
-
Monthly overall margin = Unit margin x Quantity sold monthly
= 0,40 € x (150 x 30)
= €0,40 x 4500
= €1.
The overall margin achieved in one month is €1. -
New mark rate = ((Old PV HT + Increase – PA HT) ÷ (Old PV HT + Increase)) x 100
= ((€1,00 + €0,20 – €0,60) ÷ (€1,00 + €0,20)) x 100
= (€0,60 ÷ €1,20) x 100
= 50%.
With an increase of €0,20, the markup rate would be 50%.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | PV HT – PA HT |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| New PV HT | PA HT ÷ (1 – Desired margin rate) |
| Monthly overall margin | Unit margin x Monthly quantity sold |
| New mark rate | ((Old PV HT + Increase – PA HT) ÷ (Old PV HT + Increase)) x 100 |
Application: TechWave Solutions
States :
TechWave Solutions is a software sales company that is looking to analyze its sales prices. Each software license is sold at €250 excluding VAT, and their production cost is €180 excluding VAT. The company wants to improve its financial performance by increasing its margins and adjusting its prices accordingly.
Work to do :
- Determine the current unit margin per software license.
- Calculate the current markup rate.
- What should the PV excluding tax be to achieve a margin rate of 50% on each license?
- Estimate the overall margin for selling 500 licenses.
- What would be the benefits of a 10% reduction in production costs on the margin rate?
Proposed correction:
-
Unit margin = PV excluding tax – PA excluding tax
= €250 – €180
= 70 €.
The unit margin for each license is €70. -
Brand rate = ((PV excluding tax – PA excluding tax) ÷ PV excluding tax) x 100
= ((€250 – €180) ÷ €250) x 100
= (€70 ÷ €250) x 100
= 28%.
Currently, the markup rate is 28%. -
PV HT for a margin rate = (PA HT x (1 + Margin rate))
= 180 € x (1 + 0,50)
= €180 x 1,50
= 270 €.
To achieve a margin rate of 50%, the PV excluding tax should be €270.
-
Overall margin = Unit margin x Quantity sold
= €70 x 500
= €35.
The overall margin for 500 licenses sold is €35. -
New production cost = PA HT x (1 – Reduction)
= 180 € x (1 – 0,10)
= €180 x 0,90
= 162 €.
New margin rate = ((PV HT – New PA HT) ÷ New PA HT) x 100
= ((€250 – €162) ÷ €162) x 100
= (€88 ÷ €162) x 100
= 54,32%.
A 10% reduction in production cost would increase the margin rate to 54,32%.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | PV HT – PA HT |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
| PV HT for margin rate | PA HT x (1 + Margin rate) |
| Overall margin | Unit margin x Quantity sold |
| New production cost | PA HT x (1 – Reduction) |
| New margin rate | ((PV HT – New PA HT) ÷ New PA HT) x 100 |
Application: GreenSpaces
States :
GreenSpaces is a company specializing in landscaping. Currently, it charges a flat rate of €750 excluding VAT per project, while the cost of materials and labor is €500 excluding VAT. The company is considering diversifying its offer by adding a monthly maintenance service of €100 excluding VAT, which costs €40 excluding VAT.
Work to do :
- Calculate the current unit margin per development project.
- Determine the markup rate for the development package.
- What is the margin rate for the monthly maintenance service?
- If GreenSpaces sells 20 projects and 15 maintenance services, calculate the overall margin.
- If the company decides to offer a 15% discount on the fit-out package, what will the new mark-up rate be?
Proposed correction:
-
Unit margin per project = PV HT – PA HT
= €750 – €500
= 250 €.
The unit margin for each project is €250. -
Mark rate for the package = ((PV HT – PA HT) ÷ PV HT) x 100
= ((€750 – €500) ÷ €750) x 100
= (€250 ÷ €750) x 100
= 33,33%.
The markup rate for the development package is 33,33%. -
Maintenance service margin rate = ((PV HT – PA HT) ÷ PA HT) x 100
= ((€100 – €40) ÷ €40) x 100
= (€60 ÷ €40) x 100
= 150%.
The maintenance service has a margin rate of 150%.
-
Overall margin = (Project margin x Number of projects) + (Maintenance margin x Number of interviews)
= (€250 x 20) + (€60 x 15)
= €5 + €000
= €5.
The overall margin is therefore €5. -
New PV HT after reduction = PV HT x (1 – Reduction)
= 750 € x (1 – 0,15)
= €750 x 0,85
= 637,50 €.
New mark rate = ((New PV HT – PA HT) ÷ New PV HT) x 100
= ((€637,50 – €500) ÷ €637,50) x 100
= (€137,50 ÷ €637,50) x 100
= 21,56%.
After a 15% reduction, the new markup rate is 21,56%.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin per project | PV HT – PA HT |
| Brand rate for the package | ((PV HT – PA HT) ÷ PV HT) x 100 |
| Service margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Overall margin | (Project margin x Number of projects) + (Maintenance margin x Number of interviews) |
| New PV HT after reduction | PV HT x (1 – Reduction) |
| New mark rate | ((New PV HT – PA HT) ÷ New PV HT) x 100 |
Application: BeauteNature
States :
BeauteNature is a company that distributes organic cosmetic products. One of the flagship products is sold at €80 excluding VAT, for a purchase cost of €48 excluding VAT. The company is considering launching a new promotional offer in the form of a set including three identical products at a total price of €210 excluding VAT.
Work to do :
- Calculate the current unit margin on the flagship product.
- Determine the current margin rate.
- Calculate the new unit price per product under the promotional offer.
- What will be the markup rate on this new promotional offer?
- What strategic improvement could be considered by analyzing these results?
Proposed correction:
-
Unit margin = PV excluding tax – PA excluding tax
= €80 – €48
= 32 €.
The current unit margin is therefore €32. -
Margin rate = ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100
= ((€80 – €48) ÷ €48) x 100
= (€32 ÷ €48) x 100
= 66,67%.
The current margin rate is 66,67%. -
New unit price per product on promotion = Lot price ÷ Number of products
= 210 € ÷ 3
= 70 €.
The new unit price per product is €70.
-
Markup rate on offer = ((New PV HT – PA HT) ÷ New PV HT) x 100
= ((€70 – €48) ÷ €70) x 100
= (€22 ÷ €70) x 100
= 31,43%.
The markup rate on the new promotional offer is 31,43%. -
A strategic improvement could be to analyze the promotional impact on sales volume. If the offer contributes to significantly increasing sales, it could compensate for a relative decrease in unit margin and retain more customers.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | PV HT – PA HT |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| New promotional unit price | Lot price ÷ Number of products |
| Markup rate on offer | ((New PV HT – PA HT) ÷ New PV HT) x 100 |
Application: EduSmart
States :
EduSmart, a start-up specializing in digital educational tools, sells educational software for €120 excluding VAT. The software development cost is estimated at €90 excluding VAT. EduSmart plans to introduce an additional support subscription at €30 excluding VAT per month, with a maintenance cost of €10 excluding VAT.
Work to do :
- Calculate the unit margin on the software.
- Determine the current markup rate of the software.
- Estimate the monthly margin per subscriber for the subscription service.
- What would be the overall margin if 200 software are sold and 50 subscriptions are taken out for a month?
- What pricing strategy could be considered to maximize revenues in this context?
Proposed correction:
-
Unit margin on software = PV HT – PA HT
= €120 – €90
= 30 €.
The unit margin on the software is €30. -
Software markup rate = ((PV HT – PA HT) ÷ PV HT) x 100
= ((€120 – €90) ÷ €120) x 100
= (€30 ÷ €120) x 100
= 25%.
The current markup rate of the software is 25%. -
Monthly margin per subscriber = Subscription excluding tax – Maintenance cost
= €30 – €10
= 20 €.
The monthly margin per subscriber is €20.
-
Overall margin = (Software margin x Number of software sold) + (Subscription margin x Number of subscriptions)
= (€30 x 200) + (€20 x 50)
= €6 + €000
= €7.
The overall margin is €7. -
In this context, an effective strategy could be to offer discounts for the bundled purchase of software and subscription, thereby encouraging joint adoption and potentially increasing total sales volume.
Formulas Used:
| Title | Formulas |
|---|---|
| Software unit margin | PV HT – PA HT |
| Software markup rate | ((PV HT – PA HT) ÷ PV HT) x 100 |
| Monthly margin per subscriber | HT subscription – Maintenance cost |
| Overall margin | (Software margin x No. of software) + (Subscription margin x No. of subscriptions) |
Application: FreshProduce
States :
FreshProduce is an organic fruit distributor. Currently, it sells fruit baskets at €20 excluding VAT each, for a cost of €12 excluding VAT per basket. FreshProduce wants to offer weekly subscriptions at €70 excluding VAT for four baskets, with a total cost of €44 excluding VAT.
Work to do :
- Calculate the current unit margin per basket of fruit.
- Evaluate the margin rate on each basket.
- What is the discount per basket if you subscribe to the subscription?
- Determine the markup rate on the weekly subscription.
- What would be the financial impact if subscription sales increased by 25%?
Proposed correction:
-
Unit margin = PV excluding tax – PA excluding tax
= €20 – €12
= 8 €.
The current unit margin is €8. -
Margin rate = ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100
= ((€20 – €12) ÷ €12) x 100
= (€8 ÷ €12) x 100
= 66,67%.
The margin rate per basket is 66,67%. -
Unit price per basket in subscription = Subscription price ÷ Number of baskets
= 70 € ÷ 4
= 17,50 €.
Discount per cart = Old price per cart – New unit price
= €20 – €17,50
= 2,50 €.
The discount per basket is €2,50.
-
Subscription Markup Rate = ((Subscription Price – Total Cost) ÷ Subscription Price) x 100
= ((€70 – €44) ÷ €70) x 100
= (€26 ÷ €70) x 100
= 37,14%.
The markup rate on the subscription is 37,14%. -
Financial impact of a 25% increase in subscriptions = Subscription margin x (Number of subscriptions + Increase)
Increase in number of subscriptions = Current volume x 0,25
Let's assume 100 current subscriptions
= €20 x (100 + (100 x 0,25))
= 20 € x (100 + 25)
= €20 x 125
= €2.
The 25% increase in subscriptions generates an additional financial impact of €2.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | PV HT – PA HT |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Unit price per basket resa | Subscription price ÷ Number of baskets |
| Subscription markup rate | ((Subscription Price – Total Cost) ÷ Subscription Price) x 100 |
| Increased financial impact | Subscription margin x (Number of subscriptions + Increase) |
Application: InnovBus
States :
InnovBus, a company providing innovation consulting services, charges €1 excluding VAT per day of consultation. The cost of each working day (salary, miscellaneous expenses) is €000 excluding VAT. InnovBus is considering offering a 550-day consultation package at a reduced price of €10 excluding VAT.
Work to do :
- Calculate the current unit margin per consultation day.
- Calculate the current margin rate for one day.
- What is the total margin for the 10 day package?
- Calculate the markup rate on the 10-day consultation package.
- What financial advantages and disadvantages could such a package represent for InnovBus?
Proposed correction:
-
Unit margin per day = PV HT – PA HT
= €1 – €000
= 450 €.
The unit margin per day is €450. -
Margin rate for one day = ((PV HT – PA HT) ÷ PA HT) x 100
= ((€1 – €000) ÷ €550) x 550
= (€450 ÷ €550) x 100
= 81,82%.
The current margin rate is 81,82%. -
Total margin for the package = (PV HT package – (Cost per day x Number of days))
= €9 – (€000 x 550)
= €9 – €000
= €3.
The total margin for the 10-day package is €3.
-
Mark rate on the package = ((PV HT package – Total cost package) ÷ PV HT package) x 100
= ((€9 – €000) ÷ €5) x 500
= (€3 ÷ €500) x 9
= 38,89%.
The markup rate on the 10-day package is 38,89%. -
Such a package has the advantage of ensuring a financial commitment over several days, thus avoiding the uncertainties of daily orders. However, it could also lead to reducing the unit margin per day in exchange for a guaranteed volume. This may be suitable if customers are loyal and if InnovBus can optimize the costs related to this predefined volume.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin per day | PV HT – PA HT |
| Daily margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Total flat rate margin | PV HT package – (Cost per day x Number of days) |
| Brand rate on package | ((PV HT package – Total cost package) ÷ PV HT package) x 100 |
Application: EcoloTrip
States :
EcoloTrip organizes ecological stays. Each stay is sold at the price of €300 excluding VAT, for an estimated cost of €180 excluding VAT per participant. They plan to introduce group stays for 10 people at a price of €2 excluding VAT.
Work to do :
- Determine the current unit margin for an individual stay.
- Evaluate the margin rate on a typical stay.
- What is the total margin for the proposed group stay?
- Calculate the markup rate of the group stay.
- What marketing strategy could be implemented to attract more group customers?
Proposed correction:
-
Unit margin per stay = PV excluding tax – PA excluding tax
= €300 – €180
= 120 €.
The unit margin per individual stay is €120. -
Margin rate on a stay = ((PV HT – PA HT) ÷ PA HT) x 100
= ((€300 – €180) ÷ €180) x 100
= (€120 ÷ €180) x 100
= 66,67%.
The margin rate on an individual stay is 66,67%. -
Total margin for group stay = PV excluding tax group – (Unit cost x Number of participants)
= €2 – (€700 x 180)
= €2 – €700
= 900 €.
The total margin for the group stay is €900.
-
Group stay mark rate = ((Group PV excluding VAT – Group total cost) ÷ Group PV excluding VAT) x 100
= ((€2 – €700) ÷ €1) x 800
= (€900 ÷ €2) x 700
= 33,33%.
The markup rate for group stay is 33,33%. -
To attract more customers in group packages, EcoloTrip could offer an attractive price, bonuses such as free additional activities or souvenir gifts included in the package. Partnerships with companies for ecological team building events could also be considered.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin per stay | PV HT – PA HT |
| Margin rate stay | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Total group margin | PV HT group – (Unit cost x Number of participants) |
| Group brand rate | ((Group PV HT – Group total cost) ÷ Group PV HT) x 100 |
Application: SmartHome Solutions
States :
SmartHome Solutions sells a home security device for €280 excluding VAT, while the production cost of each device is €150 excluding VAT. The company wants to introduce a package including two devices, plus a subscription to a monitoring application for €550 excluding VAT, with a total cost of €350 excluding VAT.
Work to do :
- Identify the current unit margin per safety device.
- Calculate the current markup rate.
- What is the total margin on the new proposed package?
- Calculate the margin rate for the package.
- Discuss the strategic implications of this package for SmartHome Solutions.
Proposed correction:
-
Unit margin per device = PV HT – PA HT
= €280 – €150
= 130 €.
The unit margin per device is €130. -
Brand rate = ((PV excluding tax – PA excluding tax) ÷ PV excluding tax) x 100
= ((€280 – €150) ÷ €280) x 100
= (€130 ÷ €280) x 100
= 46,43%.
The current markup rate is 46,43%. -
Total margin on the package = PV excluding VAT package – Total cost
= €550 – €350
= 200 €.
The total margin on the package is €200.
-
Margin rate for the package = ((PV HT package – Total cost) ÷ Total cost) x 100
= ((€550 – €350) ÷ €350) x 100
= (€200 ÷ €350) x 100
= 57,14%.
The margin rate for the package is 57,14%. -
The strategic package increases sales volume while maintaining attractive overall margins. By combining products with services, SmartHome Solutions strengthens customer loyalty and improves competitiveness in the connected devices market.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin per device | PV HT – PA HT |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
| Total package margin | PV HT package – Total cost |
| Package margin rate | ((PV HT package – Total cost) ÷ Total cost) x 100 |