In this section:
Application: The Italian Delight
States :
The restaurant "Le Délice Italienne" wants to calculate the commercial margin generated by its delicious pizzas that it sells to its customers. Knowing that the purchase price excluding VAT of a pizza is €5 and that they are sold at a price of €15 including VAT with a VAT rate of 20%, the owner would like to understand how the multiplier coefficient influences the commercial margin.
Work to do :
- Calculate the sales price excluding tax (HT) of the pizza.
- Determine the multiplier coefficient used to set the selling price.
- Calculate the unit margin in euros.
- Express the margin as a margin rate.
- Analyze how the multiplier could be adjusted to improve the sales margin.
Proposed correction:
-
To obtain the sales price excluding VAT, we must subtract the VAT from the price including VAT, so PV including VAT ÷ (1 + VAT rate) = PV excluding VAT.
By replacing, €15 ÷ (1 + 0,20) = €12,50.
So, the selling price excluding tax of the pizza is €12,50. -
The multiplier coefficient is calculated by dividing the selling price excluding VAT by the purchase price excluding VAT.
So, €12,50 ÷ €5 = 2,5.
The multiplier coefficient used is 2,5. -
The unit margin is calculated by subtracting the pre-tax purchase price from the pre-tax selling price.
So, €12,50 – €5 = €7,50.
The unit commercial margin is €7,50.
-
The margin rate is calculated by ((PV HT – PA HT) ÷ PA HT) x 100.
Replacing, ((€12,50 – €5) ÷ €5) x 100 = 150%.
The margin rate is 150%. -
By increasing the multiplier coefficient, for example by changing it to 3, the selling price excluding tax would be €5 x 3 = €15.
This would increase the unit margin to €10 and the margin rate to 200%, thus improving profitability.
Formulas Used:
| Title | Formulas |
|---|---|
| Sale price excl. VAT | PV including VAT ÷ (1 + VAT rate) |
| Multiplier Coefficient | PV HT ÷ PA HT |
| Unit Margin | PV HT – PA HT |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
Application: TechnoGadget
States :
TechnoGadget is a company selling technology accessories. It wants to evaluate the commercial margin it generates on its new smartphone cases. The purchase price excluding VAT of a case is €8 and the proposed sale price is €20 including VAT with a VAT rate of 20%. The managers want to exploit the multiplier coefficient to optimize their profitability.
Work to do :
- Find the sales price excluding tax (HT) of the case.
- Determine the multiplier coefficient for this item.
- Calculate the unit sales margin.
- Establish the markup rate for the cases.
- Propose a strategy based on the multiplier coefficient to increase the margin.
Proposed correction:
-
The selling price excluding VAT is calculated by PV including VAT ÷ (1 + VAT rate).
So, €20 ÷ (1 + 0,20) = €16,67.
Therefore, the selling price excluding VAT of the case is €16,67. -
To calculate the multiplier coefficient: PV HT ÷ PA HT.
Which gives us €16,67 ÷ €8 = €2,08.
The multiplier coefficient is 2,08. -
The unit margin is obtained by PV HT – PA HT.
That's €16,67 – €8 = €8,67.
The unit margin is therefore €8,67.
-
The markup rate is determined by ((PV HT – PA HT) ÷ PV HT) x 100.
Applying this: ((€16,67 – €8) ÷ €16,67) x 100 = 52%.
The mark rate is thus 52%. -
By increasing the net selling price to €25 with a constant purchase price, the new coefficient would be €25 ÷ €8 = 3,13, which would increase the margin and strengthen profitability.
Formulas Used:
| Title | Formulas |
|---|---|
| Sale price excl. VAT | PV including VAT ÷ (1 + VAT rate) |
| Multiplier Coefficient | PV HT ÷ PA HT |
| Unit Margin | PV HT – PA HT |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
Application: ModeChic
States :
ModeChic is a ready-to-wear boutique that recently launched a new dress. The purchase cost of this dress is €25 excluding VAT, and it is sold at €60 including VAT with a VAT rate of 20%. The owner wants to explore the role of the multiplier coefficient in managing the margins of her products.
Work to do :
- Calculate the sales price excluding tax (HT) of the dress.
- Determine the multiplier coefficient applied for this product.
- Estimate the sales margin for each dress sold.
- Calculate the markup rate for the dress.
- Discuss the policy implications of adjusting the multiplier.
Proposed correction:
-
The selling price excluding VAT is obtained by calculating PV including VAT ÷ (1 + VAT rate).
€60 ÷ (1 + 0,20) = €50.
So, the selling price excluding tax of the dress is €50. -
The multiplier coefficient is found by PV HT ÷ PA HT.
By applying: €50 ÷ €25 = 2.
The multiplier coefficient is therefore 2. -
The unit commercial margin is determined by PV HT – PA HT.
50 € – 25 € = 25 €.
Therefore, the unit margin is €25.
-
The margin rate is calculated by ((PV HT – PA HT) ÷ PA HT) x 100.
Which gives ((€50 – €25) ÷ €25) x 100 = 100%.
So the margin rate is 100%. -
If the multiplier is increased to 2,5, the new selling price excluding VAT would be €25 x 2,5 = €62,50, thus increasing the margin for each sale and maximising overall profit.
Formulas Used:
| Title | Formulas |
|---|---|
| Sale price excl. VAT | PV including VAT ÷ (1 + VAT rate) |
| Multiplier Coefficient | PV HT ÷ PA HT |
| Unit Margin | PV HT – PA HT |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
Application: Organic Vitality
States :
Vitalité Bio, specializing in organic food products, wants to optimize its sales margin on a new fruit juice. The purchase price excluding tax of a bottle is €2 and is sold at €4 including tax with a VAT rate of 5,5%. The company wants to understand the use of the multiplier coefficient.
Work to do :
- Convert the sales price including tax to obtain the sales price excluding tax.
- Determine the chosen multiplier coefficient.
- Calculate the trade margin for each bottle.
- Find the brand rate of this drink.
- Provide your opinion on the potential impact of a change in the multiplier coefficient.
Proposed correction:
-
In order to calculate the selling price excluding VAT, we use the formula PV including VAT ÷ (1 + VAT rate).
This gives €4 ÷ (1 + 0,055) = €3,79.
The selling price excluding tax is therefore €3,79. -
The multiplier coefficient is simply PV HT ÷ PA HT.
So, €3,79 ÷ €2 = 1,895.
Hence a multiplier coefficient of 1,895. -
The unit commercial margin is obtained using PV HT – PA HT.
Which gives €3,79 – €2 = €1,79.
The margin on each bottle is therefore €1,79.
-
The markup rate is obtained by applying the formula ((PV HT – PA HT) ÷ PV HT) x 100.
We have ((€3,79 – €2) ÷ €3,79) x 100 = 47,23%.
The markup rate is therefore 47,23%. -
By increasing the multiplier coefficient to 2, the price excluding VAT could rise to €4, thus maximising profitability and positioning the product favourably in the market.
Formulas Used:
| Title | Formulas |
|---|---|
| Sale price excl. VAT | PV including VAT ÷ (1 + VAT rate) |
| Multiplier Coefficient | PV HT ÷ PA HT |
| Unit Margin | PV HT – PA HT |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
Application: Sound Studio
States :
Studio Sonore, a company specializing in sound equipment, sells a speaker model. The purchase price excluding tax is €150 and it is sold at €300 including tax with a VAT of 20%. The company wants to analyze the impact of the multiplier coefficient on its commercial margin.
Work to do :
- Calculate the selling price excluding tax of the speaker.
- Establish the multiplier coefficient.
- Determine the trade margin per unit.
- Calculate the margin rate for this enclosure.
- Propose a strategic solution to adjust the margin via the multiplier coefficient.
Proposed correction:
-
The selling price excluding VAT is found by dividing the PV including VAT by (1 + VAT rate).
So, €300 ÷ (1 + 0,20) = €250.
The selling price of the speaker excluding VAT is €250. -
The multiplier coefficient is given by PV HT ÷ PA HT.
By applying: €250 ÷ €150 = 1,67.
So the multiplier coefficient is 1,67. -
The unit commercial margin is obtained using PV HT – PA HT.
This gives €250 – €150 = €100.
The margin per speaker is therefore €100.
-
The margin rate is calculated as follows: ((PV HT – PA HT) ÷ PA HT) x 100.
Replacing, ((€250 – €150) ÷ €150) x 100 = 66,67%.
The margin rate for the enclosure is 66,67%. -
By increasing the multiplier coefficient to 2, the selling price excluding tax could be €300, thus increasing the unit margin to €150, improving the profitability of the company.
Formulas Used:
| Title | Formulas |
|---|---|
| Sale price excl. VAT | PV including VAT ÷ (1 + VAT rate) |
| Multiplier Coefficient | PV HT ÷ PA HT |
| Unit Margin | PV HT – PA HT |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
Application: EcoEnergy
States :
EcoEnergie, a company specializing in solar equipment, is studying the margin on its solar panels. The purchase price excluding tax is €300 and they are offered at €540 including tax with a VAT of 5,5%. Analyzing the multiplier coefficient can offer opportunities for improving margins.
Work to do :
- Calculate the selling price excluding tax of solar panels.
- Determine the multiplier coefficient used.
- Evaluate the commercial margin per panel.
- Calculate the markup rate for these panels.
- Suggest optimization via multiplier coefficient to improve profitability.
Proposed correction:
-
To obtain the selling price excluding VAT, you must divide the VAT-inclusive sales price by (1 + VAT rate).
€540 ÷ (1 + 0,055) = €511,18.
The selling price excluding tax is therefore €511,18. -
The multiplier coefficient is obtained by PV HT ÷ PA HT.
Which gives €511,18 ÷ €300 = €1,70.
The multiplier coefficient is 1,70. -
The unit commercial margin is obtained by calculating PV HT – PA HT.
So, €511,18 – €300 = €211,18.
The margin per solar panel is €211,18.
-
The markup rate is ((PV HT – PA HT) ÷ PV HT) x 100.
Replacing, ((€511,18 – €300) ÷ €511,18) x 100 = 41,31%.
The markup rate for solar panels is 41,31%. -
By increasing the multiplier coefficient to 2, the selling price excluding VAT could be increased to €600, thereby raising the margin to €300, which would significantly strengthen the company's competitive position.
Formulas Used:
| Title | Formulas |
|---|---|
| Sale price excl. VAT | PV including VAT ÷ (1 + VAT rate) |
| Multiplier Coefficient | PV HT ÷ PA HT |
| Unit Margin | PV HT – PA HT |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
Application: DelicesGourmands
States :
DelicesGourmands, a boutique specializing in artisanal sweets, wants to study the commercial margin on its organic chocolate. The purchase price of the chocolate is €10 excluding tax and it is sold at €24 including tax with a VAT of 5,5%. The company plans to exploit the multiplier coefficient to adjust margins and boost its profits.
Work to do :
- Calculate the sales price excluding tax (HT) of the chocolate.
- Determine the multiplier coefficient used by the store.
- Evaluate the sales margin generated per unit sold.
- Calculate the chocolate margin rate.
- Discuss a strategy to adjust the coefficient to optimize the margin.
Proposed correction:
-
The selling price excluding VAT is calculated by dividing the selling price including VAT by (1 + VAT rate).
So, €24 ÷ (1 + 0,055) = €22,75.
So, the selling price excluding tax of the chocolate is €22,75. -
The multiplier coefficient is given by PV HT ÷ PA HT.
Applying it: €22,75 ÷ €10 = €2,275.
So the multiplier coefficient is 2,275. -
The commercial margin is the difference between the PV HT and the PA HT.
So, €22,75 – €10 = €12,75.
The commercial margin per unit of chocolate sold is €12,75.
-
The margin rate is calculated by ((PV HT – PA HT) ÷ PA HT) x 100.
Calculation level: ((€22,75 – €10) ÷ €10) x 100 = 127,5%.
So the margin rate is 127,5%. -
If the multiplier coefficient is adjusted to 3, the selling price excluding tax could increase to €30, which would significantly increase the margin, thus optimizing the profit generated by each sale.
Formulas Used:
| Title | Formulas |
|---|---|
| Sale price excl. VAT | PV including VAT ÷ (1 + VAT rate) |
| Multiplier Coefficient | PV HT ÷ PA HT |
| Unit Margin | PV HT – PA HT |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
Application: Flowers&Nature
States :
Fleurs&Nature is a florist that offers creative floral arrangements. The purchase price of a composition is €15 excluding VAT and it is sold at €45 including VAT with a VAT of 20%. The company wants to analyze its commercial margin to optimize its pricing strategy.
Work to do :
- Calculate the sales price excluding tax (HT) of the floral arrangement.
- Determine the multiplier coefficient applied.
- Evaluate the sales margin per unit sold.
- Calculate the markup rate on this floral arrangement.
- Suggest an improvement track to adjust the margin using the multiplier coefficient.
Proposed correction:
-
To obtain the selling price excluding VAT, divide the price including VAT by (1 + VAT rate).
Which gives: €45 ÷ (1 + 0,20) = €37,50.
The selling price excluding tax of the floral arrangement is €37,50. -
The multiplier coefficient is obtained with the formula: PV HT ÷ PA HT.
So: €37,50 ÷ €15 = 2,5.
The multiplier coefficient applied is 2,5. -
The commercial margin per unit is PV HT – PA HT.
Which gives: €37,50 – €15 = €22,50.
The commercial margin per floral arrangement is therefore €22,50.
-
The markup rate is calculated as follows: ((PV HT – PA HT) ÷ PV HT) x 100.
Replacing, ((€37,50 – €15) ÷ €37,50) x 100 = 60%.
The markup rate of the flower arrangement is 60%. -
An improvement could be to increase the multiplier coefficient to 3, which would increase the selling price excluding tax to €45, increase the unit margin and strengthen the overall profitability of the florist.
Formulas Used:
| Title | Formulas |
|---|---|
| Sale price excl. VAT | PV including VAT ÷ (1 + VAT rate) |
| Multiplier Coefficient | PV HT ÷ PA HT |
| Unit Margin | PV HT – PA HT |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
Application: EcoFashion
States :
EcoFashion, an innovative eco-friendly clothing brand, analyzes the sales margin on its organic t-shirts. The purchase price excluding VAT for each t-shirt is €12 and the sales price is set at €36 including VAT with a VAT of 20%. The company wants to evaluate how the multiplier coefficient influences its profits.
Work to do :
- Calculate the sales price excluding tax (HT) of the t-shirt.
- What is the value of the multiplier coefficient applied?
- Calculate the unit sales margin of the t-shirt.
- Determine the margin rate for each t-shirt sale.
- Suggest a potential modification of the multiplier coefficient to maximize the commercial margin.
Proposed correction:
-
The selling price excluding VAT is obtained by dividing the price including VAT by (1 + VAT rate).
So: €36 ÷ (1 + 0,20) = €30.
The selling price excluding tax of the t-shirt is therefore €30. -
The multiplier coefficient is PV HT ÷ PA HT.
By applying: €30 ÷ €12 = 2,5.
So the multiplier coefficient is 2,5. -
The unit commercial margin is obtained by the formula: PV HT – PA HT.
So, €30 – €12 = €18.
The margin per t-shirt is €18.
-
The margin rate is calculated using the formula: ((PV HT – PA HT) ÷ PA HT) x 100.
This gives ((€30 – €12) ÷ €12) x 100 = 150%.
The margin rate is 150%. -
A coefficient adjustment to 3 would facilitate an increase in the selling price excluding tax to €36, which maximises the margin to €24, thereby strengthening the company's profit margins.
Formulas Used:
| Title | Formulas |
|---|---|
| Sale price excl. VAT | PV including VAT ÷ (1 + VAT rate) |
| Multiplier Coefficient | PV HT ÷ PA HT |
| Unit Margin | PV HT – PA HT |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |