How to calculate trade margin example | 9 Exercises

Application: Sweet Delight Pastry

States :

The "Doux Délice" pastry shop offers its customers a new recipe for gourmet cupcakes. The purchase price excluding tax (VAT) of the ingredients for a batch of 100 cupcakes is €150. These cupcakes are sold at €3,50 excluding tax per unit. The pastry shop wants to analyze its commercial margins in order to improve its sales strategy.

Work to do :

1. Calculate the unit margin (in euros) made on each cupcake.
2. Determine the overall net margin achieved if 100 cupcakes are sold.
3. Evaluate the margin rate of this product.
4. Calculate the markup rate.
5. Analyze what the overall margin would be if the selling price was €4 excluding tax per cupcake.

Proposed correction:

1. To calculate the unit margin, we use the formula: Unit margin = PV HT – PA HT.
   Replacing with the given values: €3,50 – (€150 ÷ ​​100) = €3,50 – €1,50 = €2.
   The unit margin is therefore €2 per cupcake.

2. The overall margin is calculated by multiplying the unit margin by the quantity sold: Overall margin = Unit margin x quantity sold.
   Replacing: €2 x 100 = €200.
   The overall margin excluding tax achieved for the sale of 100 cupcakes is €200.

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

Let's replace with the values: ((€3,50 – €1,50) ÷ €1,50) x 100 = (€2 ÷ €1,50) x 100 = 133,33%.
The margin rate is 133,33%.

4. For the markup rate, the formula is: Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100.
   By calculating: ((€3,50 – €1,50) ÷ €3,50) x 100 = (€2 ÷ €3,50) x 100 = 57,14%.
   The markup rate for cupcakes is 57,14%.

5. If the sale price was €4 excluding VAT, let's recalculate the unit margin: €4 – €1,50 = €2,50.
   So the overall margin would be: €2,50 x 100 = €250.
   If the selling price were adjusted to €4 excluding VAT, the overall margin would be €250.

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: Tech Innov Solutions

States :

Tech Innov Solutions, a start-up specializing in the sale of technological gadgets, purchases innovative headphones at a purchase price excluding VAT of €30 per unit. These headphones are sold at a price of €55 excluding VAT per unit. The company wants to evaluate the effectiveness of its pricing policy through its margin.

Work to do :

1. What is the unit margin per listener?
2. Calculate the overall margin if 250 headphones are sold.
3. Calculate the margin rate for this product.
4. Determine the markup rate applied to the headphones.
5. Discuss the potential impact of shipping costs on margin if a €5 per headphone fee is added.

Proposed correction:

1. The unit margin is calculated as: Unit margin = PV HT – PA HT.
   Substituting: €55 – €30 = €25.
   The unit margin per earphone is €25.

2. The overall margin is obtained by: Overall margin = Unit margin x quantity sold.
   Let's replace: €25 x 250 = €6.
   The overall margin for 250 headphones sold is €6.

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

Let's calculate: ((€55 – €30) ÷ €30) x 100 = (€25 ÷ €30) x 100 = 83,33%.
The margin rate for headphones is 83,33%.

4. The markup rate is calculated with: Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100.
   By doing: ((€55 – €30) ÷ €55) x 100 = (€25 ÷ €55) x 100 = 45,45%.
   The markup rate on headphones is 45,45%.

5. If a shipping cost of €5 is added, the purchase cost becomes €35.
   Let’s recalculate the unit margin: €55 – €35 = €20.
   Let’s recalculate the overall margin: €20 x €250 = €5.
   Transport costs would reduce the overall margin to €5, thus affecting 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: Fashionista Chic

States :

The online fashion store "Fashionista Chic" offers a new summer dress at a purchase price excluding VAT of €40 per piece. These dresses are sold at a price of €95 excluding VAT each. Fashionista Chic wants to calculate and optimize its margins.

Work to do :

1. What is the unit margin achieved for each dress?
2. Estimate the overall margin if 120 dresses are sold.
3. Calculate the margin rate for this summer dress.
4. What is the mark rate?
5. Consider the impact of a 10% reduction in the selling price on the overall margin.

Proposed correction:

1. The unit margin is calculated as follows: Unit margin = PV HT – PA HT.
   Replacing: €95 – €40 = €55.
   The unit margin per dress is €55.

2. The overall margin is obtained by the formula: Overall margin = Unit margin x quantity sold.
   Calculating: €55 x 120 = €6.
   The overall margin for the sale of 120 dresses is €6.

3. The margin rate is calculated as follows: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.

Let's apply the values: ((€95 – €40) ÷ €40) x 100 = (€55 ÷ €40) x 100 = 137,5%.
The margin rate for dresses is 137,5%.

4. The markup rate is given by: Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100.
   Replacing: ((€95 – €40) ÷ €95) x 100 = (€55 ÷ €95) x 100 = 57,89%.
   The markup rate for each dress is 57,89%.

5. If a 10% reduction is applied to the sale price, the new PV excluding tax is: €95 x 0,90 = €85,50.
   The new unit margin is: €85,50 – €40 = €45,50.
   New overall margin: €45,50 x 120 = €5.
   The reduction would result in a decrease in the overall margin of €1, ​​which could affect 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: Bio Santé Plus

States :

The company "Bio Santé Plus" sells organic food supplements. The purchase price excluding tax is €12 per box, and they are sold at €25 excluding tax per unit. In order to make their offer more competitive, the company wants to have an overview of the margins.

Work to do :

1. Calculate the unit margin on each box of supplements.
2. What is the overall margin if 600 boxes are sold?
3. Determine the margin rate achieved.
4. Evaluate the markup rate for these supplements.
5. Consider the effect of a promotional campaign offering a €3 discount on the overall margin.

Proposed correction:

1. For the unit margin, use the formula: Unit margin = PV HT – PA HT.
   Substituting: €25 – €12 = €13.
   Each box generates a unit margin of €13.

2. Let's calculate the overall margin with the formula: Overall margin = Unit margin x quantity sold.
   By applying: €13 x 600 = €7.
   The overall margin for 600 boxes is €7.

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

Let's calculate: ((€25 – €12) ÷ €12) x 100 = (€13 ÷ €12) x 100 = 108,33%.
The margin rate is 108,33%.

4. The markup rate is defined by: Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100.
   Let's calculate: ((€25 – €12) ÷ €25) x 100 = (€13 ÷ €25) x 100 = 52%.
   The markup rate for these supplements is 52%.

5. If a promotion offering €3 discount is considered, the new PV excluding tax is: €25 – €3 = €22.
   New unit margin: €22 – €12 = €10.
   New overall margin: €10 x 600 = €6.
   The campaign would result in a reduction in the overall margin to €6, which could impact 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: Gourmet Restaurant

States :

The restaurant "Resto Gourmet" is renowned for its refined dishes. It offers a new gourmet menu at a cost price excluding tax of €18 per dish. Customers pay €45 excluding tax to taste this menu. The restaurateur wants to know the margins made in order to structure his prices.

Work to do :

1. What is the unit margin amount per dish?
2. Estimate the overall margin if 300 menus are sold.
3. Calculate the margin rate of the gourmet menu.
4. How important is the markup rate?
5. Consider the impact of a 15% increase in selling price on unit and overall margin.

Proposed correction:

1. The unit margin is calculated with: Unit margin = PV HT – PA HT.
   Replacing the values: €45 – €18 = €27.
   Each dish offers a unit margin of €27.

2. The overall margin is determined by: Overall margin = Unit margin x quantity sold.
   Calculating: €27 x 300 = €8.
   The overall margin for the sale of 300 menus is €8.

3. Let’s calculate the margin rate: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.

By applying: ((€45 – €18) ÷ €18) x 100 = (€27 ÷ €18) x 100 = 150%.
The margin rate is 150%.

4. For the markup rate: Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100.
   Let's calculate: ((€45 – €18) ÷ €45) x 100 = (€27 ÷ €45) x 100 = 60%.
   The brand rate reaches 60%, indicating the effectiveness of the pricing strategy.

5. With a 15% increase in the PV excluding VAT, the new PV excluding VAT is: €45 x 1,15 = €51,75.
   New unit margin: €51,75 – €18 = €33,75.
   New overall margin: €33,75 x 300 = €10.
   Increasing the selling price improves the unit and overall margin to €33,75 and €10 respectively.

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: Eco Savvy Electronics

States :

Eco Savvy Electronics develops eco-friendly household appliances. These appliances cost €75 excluding VAT to produce and are sold at €130 excluding VAT each. The company wants to assess its sales margin to better adjust its prices.

Work to do :

1. Calculate the unit margin obtained per device.
2. deduct the overall margin for 800 units sold.
3. What is the margin rate on the devices?
4. Express the markup rate for each device.
5. Consider the impact on margin if the purchase price increased by 20%.

Proposed correction:

1. The unit margin is calculated by: Unit margin = PV HT – PA HT.
   With the given values: €130 – €75 = €55.
   Each device offers a unit margin of €55.

2. The overall margin is obtained by: Overall margin = Unit margin x quantity sold.
   Let’s calculate: €55 x €800 = €44.
   The overall margin for 800 devices sold is €44.

3. The margin rate is evaluated as follows: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.

By applying: ((€130 – €75) ÷ €75) x 100 = (€55 ÷ €75) x 100 = 73,33%.
The margin rate of the devices is 73,33%.

4. For the markup rate, we use the formula: Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100.
   Let's replace: ((€130 – €75) ÷ €130) x 100 = (€55 ÷ €130) x 100 = 42,31%.
   The markup rate of the devices is 42,31%.

5. If the purchase price increases by 20%, the new net PA is: €75 x 1,20 = €90.
   Let’s recalculate the unit margin: €130 – €90 = €40.
   New overall margin: €40 x 800 = €32.
   This price increase would make the unit margin €15 lower and the overall margin €32, with a significant impact on 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: Green Garden Tools

States :

Green Garden Tools offers eco-friendly lawnmowers at a purchase price excluding VAT of €200 each. The sale price is set at €350 excluding VAT. The company wants to evaluate the commercial performance of this product.

Work to do :

1. Estimate the unit margin for each mower.
2. Calculate the overall margin if 150 mowers are sold.
3. Determine the margin rate for each mower.
4. Calculate the markup rate.
5. What would be the impact of a €50 reduction in the selling price on the overall margin?

Proposed correction:

1. The unit margin per mower is: Unit margin = PV HT – PA HT.
   Let’s calculate: €350 – €200 = €150.
   The unit margin is €150 for each mower.

2. Let's calculate the overall margin: Overall margin = Unit margin x quantity sold.
   Replacing: €150 x 150 = €22.
   The overall margin for 150 mowers is €22.

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

By applying the formula: ((€350 – €200) ÷ €200) x 100 = (€150 ÷ ​​€200) x 100 = 75%.
The margin rate for mowers is 75%.

4. For the markup rate, the formula is: Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100.
   By calculating: ((€350 – €200) ÷ €350) x 100 = (€150 ÷ €350) x 100 = 42,86%.
   The mark rate reached 42,86%.

5. In the event of a reduction of €50 on the PV excluding VAT, the new PV excluding VAT would be: €350 – €50 = €300.
   Let’s recalculate the unit margin: €300 – €200 = €100.
   Let’s calculate the new overall margin: €100 x 150 = €15.
   This reduction would lower the overall margin to €15, which would harm total 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

App: Voyager Travel Gear

States :

Voyager Travel Gear sells premium travel bags that cost €45 excluding VAT to buy and are sold at €90 excluding VAT. The company wants to revise its prices based on the analysis of its commercial margins.

Work to do :

1. Calculate the unit margin for each travel bag.
2. What is the overall margin if 500 bags are sold?
3. Calculate the margin rate.
4. What is the value of the markup rate?
5. Imagine the impact of a €5 per unit discount on the overall margin.

Proposed correction:

1. The unit margin is obtained by the formula: Unit margin = PV HT – PA HT.
   Replacing the numbers: €90 – €45 = €45.
   Each bag generates a unit margin of €45.

2. For the overall margin: Overall margin = Unit margin x quantity sold.
   Let’s calculate: €45 x €500 = €22.
   The overall margin for 500 bags is €22.

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

By calculating: ((€90 – €45) ÷ €45) x 100 = (€45 ÷ €45) x 100 = 100%.
The margin rate for each bag is 100%.

4. For the markup rate, let's use the formula: Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100.
   Replacing: ((€90 – €45) ÷ €90) x 100 = (€45 ÷ €90) x 100 = 50%.
   The markup rate is 50% for these bags.

5. When a discount of €5 is applied, the new PV excluding tax is: €90 – €5 = €85.
   New unit margin: €85 – €45 = €40.
   New overall margin: €40 x 500 = €20.
   This discount would reduce the overall margin to €20, which could impact 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: Natural Beauty Products

States :

Natural Beauty Products sells facial creams at a purchase price excluding VAT of €10 per unit. The sales price is set at €22 excluding VAT. The company aims to improve its profitability with a detailed analysis of its margins.

Work to do :

1. What is the unit margin amount?
2. Estimate the overall margin if 1 creams are sold.
3. Calculate the margin rate.
4. Determine the markup rate for these creams.
5. Analyze how a price drop of €2 per unit would affect the total margin.

Proposed correction:

1. The formula for unit margin is: Unit margin = PV HT – PA HT.
   Let’s calculate: €22 – €10 = €12.
   Each cream provides a unit margin of €12.

2. For the overall margin: Overall margin = Unit margin x quantity sold.
   We have: €12 x €1 = €000.
   The overall margin for 1 creams is €000.

3. Margin rate: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.

Using the formula: ((€22 – €10) ÷ €10) x 100 = (€12 ÷ €10) x 100 = 120%.
The margin rate is 120% for each cream.

4. For the markup rate, we write: Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100.
   Let's apply the values: ((€22 – €10) ÷ €22) x 100 = (€12 ÷ €22) x 100 = 54,55%.
   The markup rate for these creams is 54,55%.

5. If the sale price drops by €2, the new PV excluding tax is: €22 – €2 = €20.
   New unit margin: €20 – €10 = €10.
   New overall margin: €10 x €1 = €000.
   This decrease reduces the overall margin to €10, a notable decrease that could impact 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