In this section:
Application: Moulin Bakery Pastry Shop
States :
Boulangerie Pâtisserie du Moulin recently launched a new line of artisanal pastries and wants to analyze the profitability of this project. The product manager mentioned that the phase margin needs to be calculated to evaluate the performance of the launch. You have the following information:
- Purchase price excluding tax (PA excluding tax) of each pastry: €1,20
- Unit selling price excluding tax (PV excluding tax): €2,00
- Quantity sold: 500 units
Work to do :
- Calculate the unit margin for a pastry.
- Calculate the overall margin made on this range of pastries.
- Determine the margin rate.
- Determine the markup rate.
- Analyze the impact of this phase margin on the financial evaluation of the range.
Proposed correction:
-
Unit margin:
The unit margin is calculated by subtracting the pre-tax purchase price from the pre-tax selling price.
Unit margin = PV excluding tax – PA excluding tax = €2,00 – €1,20 = €0,80.Each pastry sold generates a unit margin of €0,80.
-
Overall margin:
The overall margin is the sum of the unit margins multiplied by the quantity sold.
Overall margin = Unit margin x Quantity sold = €0,80 x 500 = €400.The overall margin for this range of pastries is €400.
-
Margin rate:
The margin rate is calculated using the following formula:
Margin rate = ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100
Margin rate = ((€2,00 – €1,20) ÷ €1,20) x 100 = 66,67%.
The margin rate is 66,67%, indicating an appreciable profitability compared to the purchase cost.
-
Mark rate:
Let's calculate the markup rate using this formula:
Brand rate = ((PV excluding tax – PA excluding tax) ÷ PV excluding tax) x 100
Markup rate = ((€2,00 – €1,20) ÷ €2,00) x 100 = 40%.The markup rate is 40%, illustrating the ratio of margin to selling price.
-
Phase margin analysis:
The phase margin, here represented by the overall margin and the associated rates, shows that the initial project of the pastries is financially interesting, with satisfactory margins. For a more in-depth analysis, it would be relevant to follow the figures over an extended period in order to confirm the long-term viability of this new range.
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 Innovate
States :
Tech Innovate has introduced a new line of electronic gadgets. As sales begin to grow, the management team wants to evaluate the phase margin to understand if this new product line is meeting the expected success. The following information is available:
- Unit purchase price excluding VAT (PA excluding VAT) of the gadget: €25,00
- Unit selling price excluding tax (PV excluding tax): €45,00
- Quantity sold: 300 gadgets
Work to do :
- Calculate the unit margin for an electronic gadget.
- Calculate the overall margin made on this line of gadgets.
- Calculate the margin rate.
- Get the mark rate and interpret its meaning.
- Discuss the potential effect of this phase margin on the future performance of the company.
Proposed correction:
-
Unit margin:
The unit margin is calculated by subtracting the pre-tax purchase price from the pre-tax selling price.
Unit margin = PV excluding tax – PA excluding tax = €45,00 – €25,00 = €20,00.The unit margin for each gadget sold is €20,00.
-
Overall margin:
To get the overall margin, let's multiply the unit margin by the number of gadgets sold.
Overall margin = Unit margin x Quantity sold = €20,00 x 300 = €6.The overall margin generated by the sale of the gadgets is €6.
-
Margin rate:
To calculate the margin rate, let's use this formula:
Margin rate = ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100
Margin rate = ((€45,00 – €25,00) ÷ €25,00) x 100 = 80%.
The margin rate reached 80%, illustrating good profitability per unit.
-
Mark rate:
Let's calculate the markup rate with the following formula:
Brand rate = ((PV excluding tax – PA excluding tax) ÷ PV excluding tax) x 100
Markup rate = ((€45,00 – €25,00) ÷ €45,00) x 100 ? 44,44%.The markup rate of 44,44% shows the share of margin in the selling price, which is significant for pricing strategies.
-
Analysis and strategic implications:
The high margins earned on these gadgets suggest high profitability of the product, which may encourage Tech Innovate to invest further in this line. This phase margin encourages continuity of product development and helps support the future growth of the company.
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: Glamour Couture
States :
Glamour Couture, a high-end clothing brand, wants to re-evaluate the profitability of its latest evening dress collection. To do this, it is important to calculate the phase margin of this collection. We provide you with the following data:
- Purchase price excluding tax (PA excluding tax) per dress: €75,00
- Unit selling price excluding tax (PV excluding tax): €150,00
- Quantity sold: 150 dresses
Work to do :
- Calculate the unit margin for an evening dress.
- Determine the overall margin accumulated from the total sale of dresses.
- Calculate the margin rate.
- Calculate the markup rate and explain what it means.
- Discuss the importance of this phase margin for Glamour Couture's market positioning.
Proposed correction:
-
Unit margin:
Let's calculate the unit margin per dress by subtracting the purchase price excluding tax from the sale price excluding tax.
Unit margin = PV excluding tax – PA excluding tax = €150,00 – €75,00 = €75,00.The margin obtained for each dress sold is €75,00.
-
Overall margin:
The overall margin is obtained by multiplying the unit margin by the number of dresses sold.
Overall margin = Unit margin x Quantity sold = €75,00 x 150 = €11.The overall margin for the total sale of dresses is €11.
-
Margin rate:
For the margin rate, let's apply the formula:
Margin rate = ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100
Margin rate = ((€150,00 – €75,00) ÷ €75,00) x 100 = 100%.
A 100% margin rate demonstrates appreciable efficiency in profit per unit.
-
Mark rate:
For the markup rate, let's use this formula:
Brand rate = ((PV excluding tax – PA excluding tax) ÷ PV excluding tax) x 100
Markup rate = ((€150,00 – €75,00) ÷ €150,00) x 100 = 50%.The 50% markup rate indicates that the margin constitutes half of the selling price, meaning that the price positioning is justified.
-
Strategic thinking on phase margin:
With such high margins, Glamour Couture is well positioned to maintain its premium brand image by adjusting its distribution and marketing strategies to support this excellent market positioning.
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 Savors
States :
Gourmet Savours, a home delivery company for gourmet meals, has just set up a special menu for festive dinners. The company wants to evaluate the profitability of this new menu by calculating the phase margin. Here is the available information:
- Purchase price excluding tax (PA excluding tax) of the menu per meal: €18,00
- Unit selling price excluding tax (PV excluding tax): €35,00
- Quantity delivered: 200 menus
Work to do :
- Calculate the unit margin per menu.
- Calculate the total overall margin made by these menu sales.
- Calculate the margin rate.
- Calculate the markup rate and assess its relevance.
- Discuss the long-term effect of this phase margin on Gourmet Savours' strategy.
Proposed correction:
-
Unit margin:
The margin per menu is obtained by subtracting the purchase price excluding VAT from the sale price excluding VAT.
Unit margin = PV excluding tax – PA excluding tax = €35,00 – €18,00 = €17,00.Each menu sold generates a unit margin of €17,00.
-
Overall margin:
Let's multiply the unit margin by the quantity of menus delivered to obtain the overall margin.
Overall margin = Unit margin x Quantity delivered = €17,00 x 200 = €3.The overall margin amounts to €3 for all menus sold.
-
Margin rate:
Let's use the margin rate formula as follows:
Margin rate = ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100
Margin rate = ((€35,00 – €18,00) ÷ €18,00) x 100 ? 94,44%.
The margin rate reached approximately 94,44%, indicating excellent profitability.
-
Mark rate:
Let's calculate the markup rate:
Brand rate = ((PV excluding tax – PA excluding tax) ÷ PV excluding tax) x 100
Markup rate = ((€35,00 – €18,00) ÷ €35,00) x 100 ? 48,57%.A markup rate of 48,57% indicates that the margin contributes significantly to the selling price, a sign of good cost management.
-
Strategic impact of phase margin:
In the long term, this healthy phase margin would allow Gourmet Savours to reposition its pricing strategy, increase customer satisfaction and expand its market while maintaining its competitive advantage in the meal delivery sector.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | PV HT – PA HT |
| Overall margin | Unit margin x Quantity delivered |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
Application: Eco Green Solutions
States :
Eco Green Solutions, a company engaged in the sale of sustainable energy systems, wants to analyze its mini solar panel project. To do this, it is necessary to calculate the phase margin. The available data are as follows:
- Purchase price excluding tax (PA excluding tax) per panel: €58,00
- Unit selling price excluding tax (PV excluding tax): €95,00
- Quantity sold: 450 units
Work to do :
- Determine the unit margin for each panel.
- Calculate the overall margin for all panels sold.
- Calculate the margin rate.
- Calculate the markup rate and discuss its implication.
- Think strategically about the relevance of this phase margin for Eco Green Solutions.
Proposed correction:
-
Unit margin:
The unit margin is the difference between the selling price excluding VAT and the purchasing price excluding VAT.
Unit margin = PV excluding tax – PA excluding tax = €95,00 – €58,00 = €37,00.A panel sold generates a unit margin of €37,00.
-
Overall margin:
The overall margin is obtained by multiplying the unit margin by the number of panels sold.
Overall margin = Unit margin x Quantity sold = €37,00 x 450 = €16.The overall accumulated margin amounts to €16 for all panels sold.
-
Margin rate:
To find the margin rate, let's use this formula:
Margin rate = ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100
Margin rate = ((€95,00 – €58,00) ÷ €58,00) x 100 ? 63,79%.
A margin rate of 63,79% is an indicator of good profitability.
-
Mark rate:
Let's calculate the markup rate using the following formula:
Brand rate = ((PV excluding tax – PA excluding tax) ÷ PV excluding tax) x 100
Markup rate = ((€95,00 – €58,00) ÷ €95,00) x 100 ? 38,95%.The markup rate of 38,95% indicates a solid margin relative to the selling price, which is encouraging for future marketing strategies.
-
Strategic analysis related to phase margin:
By maintaining an attractive phase margin, Eco Green Solutions could not only maximize its profits, but also reinvest in research and development. This would allow it to further innovate and expand its portfolio of sustainable products in the energy market.
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: Fitness Studio Max
States :
Fitness Studio Max, a modern and well-equipped gym, has launched personal training subscriptions to improve customer satisfaction. They are now looking to understand the phase margin for these subscriptions. Here is the information made available:
- Cost excluding tax (PA excluding tax) of the subscription offer: €100,00
- Sale price excluding VAT (PV excluding VAT) per subscription: €200,00
- Number of subscriptions sold: 120
Work to do :
- Calculate the unit margin for a personal coaching subscription.
- Calculate the total overall margin of sales made.
- Calculate the corresponding margin rate.
- Analyze the mark rate obtained.
- Discuss the strategic outlook for Fitness Studio Max given the margins achieved.
Proposed correction:
-
Unit margin:
The unit margin is found by subtracting the cost excluding tax from the selling price excluding tax.
Unit margin = PV excluding tax – PA excluding tax = €200,00 – €100,00 = €100,00.The unit margin per subscription is therefore €100,00.
-
Overall margin:
The overall margin is calculated by multiplying the unit margin by the number of subscriptions sold.
Overall margin = Unit margin x Number of subscriptions = €100,00 x 120 = €12.The total margin is €12 for all subscriptions sold.
-
Margin rate:
Let's determine the margin rate with the formula:
Margin rate = ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100
Margin rate = ((€200,00 – €100,00) ÷ €100,00) x 100 = 100%.
The 100% margin rate highlights excellent profitability on each subscription.
-
Mark rate:
Let's calculate the markup rate using this formula:
Brand rate = ((PV excluding tax – PA excluding tax) ÷ PV excluding tax) x 100
Markup rate = ((€200,00 – €100,00) ÷ €200,00) x 100 = 50%.The 50% markup rate is significant, reflecting the importance of the margin for the offering.
-
Strategic implications and perspectives:
These strong margins suggest that Fitness Studio Max is well positioned to invest in continued improvement of its services, increase its brand awareness and strengthen its position in the gym market.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | PV HT – PA HT |
| Overall margin | Unit margin x Number of subscriptions |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
Application: The Flowers of the Sun
States :
Les Fleurs du Soleil, a florist, has introduced a new collection of floral arrangements for weddings in high season. In order to know the impact of this new offer, they need to calculate the phase margin. Here are the details of the data to be exploited:
- Purchase price excluding tax (PA excluding tax) of each floral arrangement: €30,00
- Unit selling price excluding tax (PV excluding tax): €60,00
- Number of compositions sold: 100
Work to do :
- Calculate the unit margin for each floral arrangement.
- Calculate the overall margin on these sales.
- Calculate the margin rate on the compositions.
- Calculate the markup rate and explain its impact.
- Discuss the strategic opportunity that this phase margin will bring for the florist Les Fleurs du Soleil.
Proposed correction:
-
Unit margin:
The unit margin is calculated simply:
Unit margin = PV excluding tax – PA excluding tax = €60,00 – €30,00 = €30,00.Each composition sold generates a unit margin of €30,00.
-
Overall margin:
The overall margin results from the multiplication of the unit margin and the number of compositions sold.
Overall margin = Unit margin x Number of compositions = €30,00 x 100 = €3.The overall margin for floral arrangements for these sales is €3.
-
Margin rate:
Let's calculate the margin rate for these compositions:
Margin rate = ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100
Margin rate = ((€60,00 – €30,00) ÷ €30,00) x 100 = 100%.
A 100% margin rate shows high profitability per floral arrangement.
-
Mark rate:
Let's use the following formula for the markup rate:
Brand rate = ((PV excluding tax – PA excluding tax) ÷ PV excluding tax) x 100
Markup rate = ((€60,00 – €30,00) ÷ €60,00) x 100 = 50%.The 50% markup rate demonstrates a price orientation that favors margin, thus improving commercial viability.
-
Strategic analysis and perspectives:
With these high margins, Les Fleurs du Soleil could consider expanding this product line, optimizing its marketing mix and positioning itself advantageously in the premium events segment.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | PV HT – PA HT |
| Overall margin | Unit margin x Number of compositions |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
Application: Smart Tech Wearables
States :
Smart Tech Wearables, a company manufacturing smartwatches, wants to analyze the profitability of the launch of its latest model. For this, the calculation of the phase margin is necessary. Here are the elements provided:
- Production cost excluding tax (PA excluding tax) per watch: €80,00
- Unit selling price excluding tax (PV excluding tax): €150,00
- Units sold: 650 watches
Work to do :
- Calculate the unit margin for each watch sold.
- Calculate the overall margin on these watches.
- Determine the margin rate.
- Determine the markup rate and evaluate its impact.
- Consider the implications of this phase margin for future Smart Tech Wearables decisions.
Proposed correction:
-
Unit margin:
For each watch, the unit margin is determined as follows:
Unit margin = PV excluding tax – PA excluding tax = €150,00 – €80,00 = €70,00.The unit margin per watch sold amounts to €70,00.
-
Overall margin:
The overall margin is the product of the unit margin and the units sold.
Overall margin = Unit margin x Units sold = €70,00 x 650 = €45.The overall margin for these watches reaches €45.
-
Margin rate:
Let's calculate the margin rate using this formula:
Margin rate = ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100
Margin rate = ((€150,00 – €80,00) ÷ €80,00) x 100 = 87,5%.
A margin rate of 87,5% is indicative of high profitability per unit.
-
Mark rate:
Let's analyze the markup rate with this formula:
Brand rate = ((PV excluding tax – PA excluding tax) ÷ PV excluding tax) x 100
Markup rate = ((€150,00 – €80,00) ÷ €150,00) x 100 = 46,67%.The markup rate of 46,67% highlights a pricing policy that values the entire margin.
-
Strategic considerations:
These significant results in terms of phase margin allow Smart Tech Wearables to consider the development of future ranges, to increase its marketing efforts while continuing to innovate in its products.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | PV HT – PA HT |
| Overall margin | Unit Margin x Units Sold |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
Application: Artisanal Brewery
States :
Artisanal Brewery, a small craft beer company, has just launched a limited edition lager. To understand the performance of this new product, they need to calculate the phase margin. Here is the data provided:
- Production cost excluding tax (PA excluding tax) per unit: €3,00
- Unit selling price excluding tax (PV excluding tax): €7,00
- Quantity sold: 1 bottles
Work to do :
- Calculate the unit margin per bottle of beer sold.
- Determine the overall margin of this limited edition.
- Calculate the applicable margin rate.
- Calculate the markup rate and discuss its importance to Artisanal Brewery.
- Analyze the implications of this phase margin on future product launches by the company.
Proposed correction:
-
Unit margin:
To calculate the unit margin:
Unit margin = PV excluding tax – PA excluding tax = €7,00 – €3,00 = €4,00.Each bottle sold brings in a unit margin of €4,00.
-
Overall margin:
The overall margin is calculated by multiplying the unit margin by the total quantity sold.
Overall margin = Unit margin x Quantity sold = €4,00 x 1 = €200.The limited edition generated an overall margin of €4.
-
Margin rate:
Let's apply the formula for the margin rate:
Margin rate = ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100
Margin rate = ((€7,00 – €3,00) ÷ €3,00) x 100 = 133,33%.
The margin rate is very high at 133,33%, thus highlighting the exceptional profitability of this edition.
-
Mark rate:
Let's use the formula for the markup rate:
Brand rate = ((PV excluding tax – PA excluding tax) ÷ PV excluding tax) x 100
Markup rate = ((€7,00 – €3,00) ÷ €7,00) x 100 ? 57,14%.A markup rate of 57,14% highlights the margin as a proportion of the selling price, crucial for assessing the competitiveness of the price positioning.
-
Projection and strategic reflections:
These excellent margins could encourage Artisanal Brewery to pursue new limited editions while strengthening its reputation and targeting market segments that value artisanal quality.
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 |