In this section:
Application: Eco-Sustainable Shoes
States :
EcoSustainable Shoes is a company that sells eco-friendly shoes using recycled materials. For 2023, the company wants to understand the margin made on its flagship models in order to better calibrate its pricing strategy. Here is the data concerning the “BioRunner” model:
- Purchase price excluding VAT per pair: €30
- Selling price excluding VAT per pair: €60
- Quantity sold: 5000 pairs
Work to do :
- Calculate the unit margin made per pair of “BioRunner” shoes.
- Determine the overall margin of this model.
- Calculate the margin rate for “BioRunner” shoes.
- Establish the markup rate for the “BioRunner” model.
- Analyze what strategic implications the company could draw from these results.
Proposed correction:
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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 = €60 – €30 = €30.The unit margin per pair of “BioRunner” shoes is €30.
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Overall margin:
The overall margin is obtained by multiplying the unit margin by the quantity sold.
Overall margin = Unit margin x Quantity sold = €30 x 5000 = €150.The overall margin for the “BioRunner” model is €150.
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Margin rate:
The margin rate is calculated using the following formula: [(PV HT – PA HT) ÷ PA HT] x 100.
Substituting the values, [(€60 – €30) ÷ €30] x 100 = 100%.
The margin rate for “BioRunner” shoes is 100%.
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Mark rate:
The markup rate is calculated using the formula [(PV HT – PA HT) ÷ PV HT] x 100.
Replacing, [(€60 – €30) ÷ €60] x 100 = 50%.The markup rate for the “BioRunner” model is 50%.
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Strategic analysis:
The high margins and high mark-up and brand-rates indicate that the “BioRunner” model is profitable. EcoSustainable Shoes could use this information to maintain its current prices or even consider reducing prices in order to increase its market share while maintaining good 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: Tech Innovate
States :
Tech Innovate, a startup specializing in electronic gadgets, is offering a new wireless charger on the market. The team wants to analyze the financial performance of this product for 2023:
- Purchase cost excluding tax per charger: €12
- Selling price excluding VAT per charger: €25
- Quantity sold: 8000 chargers
Work to do :
- Calculate the unit margin for each charger sold.
- Evaluate the overall margin for all chargers sold.
- Determine the margin rate for their charger.
- Calculate the markup rate for this offer.
- Deduce the pricing strategies that Tech Innovate can consider in the future.
Proposed correction:
-
Unit margin:
The unit margin is the difference between the selling price excluding VAT and the purchase cost excluding VAT.
Unit margin = PV excluding tax – PA excluding tax = €25 – €12 = €13.The unit margin per charger is therefore €13.
-
Overall margin:
The overall margin is obtained by multiplying the unit margin by the quantity sold.
Overall margin = Unit margin x Quantity sold = €13 x 8000 = €104.The overall margin for chargers sold amounts to €104.
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Margin rate:
The margin rate is determined by the formula [(PV HT – PA HT) ÷ PA HT] x 100.
Substituting the values, [(€25 – €12) ÷ €12] x 100 = 108,33%.
The margin rate for the shipper is 108,33%.
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Mark rate:
The markup rate is calculated by the formula [(PV HT – PA HT) ÷ PV HT] x 100.
Using the numbers, [(€25 – €12) ÷ €25] x 100 = 52%.The markup rate for the charger is 52%.
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Strategic analysis:
Tech Innovate attracts a high unit margin, offering options to reinvest revenues into marketing or consider expanding the range. The company could also consider revising prices to capture new markets while remaining profitable.
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 Flavors
States :
Gourmet Saveurs is a company that concocts high-end prepared meals. They offer the dish "Risotto Truffé" that we want to analyze for its economic performance in 2023:
- Production cost excluding tax per dish: €8
- Selling price excluding tax per dish: €20
- Number of dishes sold: 1500 dishes
Work to do :
- Calculate the unit margin per dish of Truffled Risotto.
- Establish the overall margin for this culinary specialty.
- Evaluate the margin rate for Truffled Risotto.
- Calculate the markup rate associated with this dish.
- Interpret the results and propose a development strategy for Gourmet Saveurs.
Proposed correction:
-
Unit margin:
The unit margin is defined by the difference between the selling price excluding tax and the production cost excluding tax.
Unit margin = PV excluding tax – PA excluding tax = €20 – €8 = €12.Each Truffled Risotto dish generates a unit margin of €12.
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Overall margin:
This margin is the product of unit margins by the number of dishes sold.
Overall margin = Unit margin x Number of dishes sold = €12 x 1500 = €18.The overall margin for Truffled Risotto is €18.
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Margin rate:
The margin rate is calculated using the formula [(PV HT – PA HT) ÷ PA HT] x 100.
Let's replace the variables, [(€20 – €8) ÷ €8] x 100 = 150%.
This dish has a margin rate of 150%.
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Mark rate:
The markup rate is determined using the formula [(PV HT – PA HT) ÷ PV HT] x 100.
Applying the values, [(€20 – €8) ÷ €20] x 100 = 60%.For Truffled Risotto, the markup rate is 60%.
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Strategic analysis:
Truffled Risotto offers robust profitability, which justifies increased investment in advertising to stimulate sales. Gourmet Saveurs could expand its distribution to new points of sale to maximize its profitability.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | PV HT – PA HT |
| Overall margin | Unit margin x Number of dishes sold |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
Application: ModeSensation
States :
ModeSensation is a company in the fashion world and is looking to evaluate the financial performance of its new summer dress for 2023:
- Manufacturing cost excluding tax per dress: €25
- Selling price excluding VAT per dress: €80
- Quantity sold: 3000 dresses
Work to do :
- Calculate the unit margin generated by each summer dress.
- Determine the overall margin of this summer collection.
- Evaluate the margin rate associated with these dresses.
- Calculate the markup rate associated with the new summer outfit.
- Propose strategic directions for ModeSensation based on these results.
Proposed correction:
-
Unit margin:
The unit margin represents the difference between the selling price excluding tax and the manufacturing cost excluding tax.
Unit margin = PV excluding tax – PA excluding tax = €80 – €25 = €55.The margin obtained per dress is €55.
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Overall margin:
This margin is calculated by multiplying the unit margin by the quantity sold.
Overall margin = Unit margin x Quantity sold = €55 x 3000 = €165.The total margin for summer dresses reaches €165.
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Margin rate:
The formula for the margin rate is [(PV HT – PA HT) ÷ PA HT] x 100.
Replacing, [(€80 – €25) ÷ €25] x 100 = 220%.
The markup for the dress is 220%.
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Mark rate:
This rate is obtained by the formula [(PV HT – PA HT) ÷ PV HT] x 100.
Let's calculate it, [(€80 – €25) ÷ €80] x 100 = 68,75%.The summer dress has a brand rate of 68,75%.
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Strategic analysis:
ModeSensation is generating strong profitability from this dress, demonstrating the opportunity to expand this range. They could strengthen the branding around this flagship product to increase sales volumes or explore diversification with complementary products.
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: GreenTech Solutions
States :
GreenTech Solutions is a company offering renewable energy solutions. The company has developed a new solar panel in 2023 and wants to analyze its profitability:
- Production cost excluding tax per panel: €100
- Selling price excluding tax per panel: €250
- Quantity sold: 1 panels
Work to do :
- Calculate the unit margin of each solar panel.
- Evaluate the overall margin generated by this sale.
- Determine the margin rate for the solar panel.
- Calculate the markup rate for this eco-friendly product.
- Propose strategic directions for GreenTech Solutions based on this data.
Proposed correction:
-
Unit margin:
The unit margin is found by subtracting the production cost from the selling price.
Unit margin = PV excluding tax – PA excluding tax = €250 – €100 = €150.Each solar panel brings in a unit margin of €150.
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Overall margin:
The overall margin is the product of the unit margins times the quantity sold.
Overall margin = Unit margin x Quantity sold = €150 x 1200 = €180.The total margin for solar panels is €180.
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Margin rate:
This rate is calculated using the formula [(PV HT – PA HT) ÷ PA HT] x 100.
Let's calculate, [(€250 – €100) ÷ €100] x 100 = 150%.
The margin rate of solar panels is 150%.
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Mark rate:
The markup rate is obtained using the formula [(PV HT – PA HT) ÷ PV HT] x 100.
Substituting the values, [(€250 – €100) ÷ €250] x 100 = 60%.The markup rate for the product is 60%.
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Strategic analysis:
The business shows lucrative potential due to its high margin. GreenTech Solutions should invest in R&D to further improve the product or strengthen its marketing strategy to increase sales volume while maintaining 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: BioBeauty France
States :
BioBeauty France, an organic cosmetics company, evaluates the success of its new anti-aging serum for the year 2023:
- Manufacturing cost excluding tax per serum: €15
- Selling price excluding VAT per serum: €40
- Number of serums sold: 4000 bottles
Work to do :
- Calculate the unit margin per vial of serum.
- Determine the overall margin produced by these sales.
- Evaluate the margin rate of the anti-aging serum.
- Calculate the markup rate associated with this cosmetic.
- Discuss the strategic implications for BioBeauty France based on these figures.
Proposed correction:
-
Unit margin:
The unit margin is obtained by deducting the manufacturing cost from the selling price.
Unit margin = PV excluding tax – PA excluding tax = €40 – €15 = €25.Each bottle of anti-aging serum generates a unit margin of €25.
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Overall margin:
The overall margin is obtained by multiplying the unit margin by the number of bottles sold.
Overall margin = Unit margin x Number of serums sold = €25 x 4000 = €100.The total margin for these serum sales is €100.
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Margin rate:
This rate is calculated using the formula [(PV HT – PA HT) ÷ PA HT] x 100.
Using the data, [(€40 – €15) ÷ €15] x 100 = 166,67%.
The margin rate for anti-aging serum is 166,67%.
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Mark rate:
The markup rate is determined by the formula [(PV HT – PA HT) ÷ PV HT] x 100.
Doing the math, [(€40 – €15) ÷ €40] x 100 = 62,5%.The mark rate for this serum reaches 62,5%.
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Strategic analysis:
BioBeauty France can capitalize on high margins to strengthen its positioning in the organic cosmetics market. Considering diversification with complementary products could consolidate their reputation and attract an even wider clientele.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | PV HT – PA HT |
| Overall margin | Unit margin x Number of serums sold |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
Application: HealthPlus Equipment
States :
SantéPlus Equipement is a company specializing in the manufacture of medical equipment. They want to evaluate the profitability of their new stethoscope in 2023:
- Production cost excluding tax per stethoscope: €20
- Selling price excluding tax per stethoscope: €50
- Quantity sold: 3500 units
Work to do :
- Calculate the unit margin for each stethoscope sold.
- Evaluate the overall margin obtained from this production.
- Determine the margin rate for this medical equipment.
- Calculate the markup rate for the stethoscope.
- Evaluate the strategies that SantéPlus Equipement could adopt based on this data.
Proposed correction:
-
Unit margin:
The unit margin is obtained by subtracting the production cost from the selling price.
Unit margin = PV excluding tax – PA excluding tax = €50 – €20 = €30.Each stethoscope generates a unit margin of €30.
-
Overall margin:
The overall margin is calculated by multiplying the unit margin by the quantity sold.
Overall margin = Unit margin x Quantity sold = €30 x 3500 = €105.The total margin made on stethoscopes is €105.
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Margin rate:
This rate is calculated using the formula [(PV HT – PA HT) ÷ PA HT] x 100.
Replacing, [(€50 – €20) ÷ €20] x 100 = 150%.
The markup for the stethoscope is 150%.
-
Mark rate:
The markup rate is obtained by applying the formula [(PV HT – PA HT) ÷ PV HT] x 100.
After the calculation, [(€50 – €20) ÷ €50] x 100 = 60%.The stethoscope has a brand rate of 60%.
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Strategic analysis:
With these results, SantéPlus Equipement could invest in research to improve the product, or diversify the production line to include other medical instruments, while continuing to support profitable production.
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 Kitchen
States :
Natural Kitchen, an organic fast food company, wants to analyze its new fruit juices for 2023:
- Production cost excluding tax per juice: €3
- Selling price excluding tax per juice: €8
- Quantity sold: 10 bottles
Work to do :
- Calculate the unit margin for each bottle of juice sold.
- Determine the overall margin made on these sales.
- Evaluate the margin rate associated with these fruit juices.
- Calculate the markup rate applicable to this product.
- Suggest growth prospects for Natural Kitchen in light of these results.
Proposed correction:
-
Unit margin:
Unit margin is the difference between the selling price and the production cost per unit.
Unit margin = PV excluding tax – PA excluding tax = €8 – €3 = €5.Each bottle of fruit juice generates a unit margin of €5.
-
Overall margin:
The overall margin is calculated by multiplying the unit margin by the quantity sold.
Overall margin = Unit margin x Quantity sold = €5 x 10 = €000.The total margin obtained with fruit juices is €50.
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Margin rate:
This rate is calculated using the formula [(PV HT – PA HT) ÷ PA HT] x 100.
Let's calculate it, [(€8 – €3) ÷ €3] x 100 = 166,67%.
The margin rate for fruit juices is 166,67%.
-
Mark rate:
This rate is obtained by applying the formula [(PV HT – PA HT) ÷ PV HT] x 100.
After calculation, [(€8 – €3) ÷ €8] x 100 = 62,5%.The markup rate for these fruit juices is 62,5%.
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Strategic analysis:
Natural Kitchen may consider expanding its organic product offering based on the good margins achieved. The idea of introducing new flavors or diversified formats could attract more consumers and increase overall turnover.
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: SmartTech Devices
States :
SmartTech Devices is a company that has introduced an innovative wearable gadget in 2023, and wants to examine its profitability:
- Manufacturing cost excluding tax per gadget: €20
- Selling price excluding VAT per gadget: €55
- Quantity sold: 5000 units
Work to do :
- Calculate the unit margin made per gadget sold.
- Estimate the overall margin obtained from sales of this gadget.
- Calculate the margin rate for this product.
- Determine the brand rate of the portable gadget.
- Analyze possible strategic options for SmartTech Devices with these findings.
Proposed correction:
-
Unit margin:
The unit margin is the difference between the selling price and the manufacturing cost.
Unit margin = PV excluding tax – PA excluding tax = €55 – €20 = €35.The margin made per gadget sold is €35.
-
Overall margin:
The overall margin is calculated by multiplying the unit margin by the number of gadgets sold.
Overall margin = Unit margin x Quantity sold = €35 x 5000 = €175.The overall margin obtained with this gadget is €175.
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Margin rate:
The margin rate is given by the formula [(PV HT – PA HT) ÷ PA HT] x 100.
Calculating, [(€55 – €20) ÷ €20] x 100 = 175%.
The margin rate of the portable gadget is 175%.
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Mark rate:
The markup rate is obtained with the formula [(PV HT – PA HT) ÷ PV HT] x 100.
Replacing, [(€55 – €20) ÷ €55] x 100 = 63,64%.The markup rate for the gadget reaches 63,64%.
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Strategic analysis:
With such lucrative margins, SmartTech Devices is expected to step up its marketing efforts and explore new market segments. Developing additional features could also enhance the product's appeal and drive sustainable growth.
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 |