In this section:
Application: The Urban Beekeeper
States :
The company "L'Apiculteur Urbain" specializing in the production and sale of artisanal honey wants to evaluate its commercial performance. Its new range of honey jars has been a great success. They want to better understand the profitability of their business by calculating their commercial margin.
Work to do :
- Calculate the unit margin if the selling price excluding tax of a jar of honey is €18 and the purchasing price excluding tax is €10.
- If the company sells 500 jars of honey, determine the overall sales margin.
- Calculate the margin rate for this honeypot.
- Determine the markup rate for this jar of honey.
- Analyze the importance of a good markup rate in the pricing strategy of “L'Apiculteur Urbain”.
Proposed correction:
-
The unit margin is the difference between the selling price excluding tax (PV excluding tax) and the purchasing price excluding tax (PA excluding tax).
Using the formula: Unit margin = PV HT – PA HT.
Let's replace, Unit margin = €18 – €10 = €8.
The unit margin per pot is €8. -
The overall sales margin is calculated by multiplying the unit margin by the quantity sold.
So, €8 x 500 = €4.
The overall commercial margin for 500 pots of honey is €4. -
The margin rate is obtained by the formula: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
Let's calculate, Margin rate = ((€18 – €10) ÷ €10) x 100 = 80%.
The margin rate for this honeypot is 80%.
-
The markup rate is calculated as follows: Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100.
Let's replace, Markup rate = ((€18 – €10) ÷ €18) x 100 = 44,44%.
The markup rate for this honey pot is 44,44%. -
A good markup rate allows the company to have a good profit margin on each sale.
It also allows you to cope with possible cost variations or offer discounts without sacrificing profitability.
Thus, a good markup rate plays a crucial role in the financial and strategic health of “L'Apiculteur Urbain”.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | PV HT – PA HT |
| Overall trade margin | Unit Margin x Quantity |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
Application: TechGadget
States :
"TechGadget" is an innovative company in the field of technological accessories. It plans to launch a new range of induction chargers. In order to better plan this commercial operation, it wants to analyze the commercial margin associated with each sale.
Work to do :
- What is the unit margin if the selling price excluding VAT of a charger is €30 and the purchase price excluding VAT is €20?
- If TechGadget sells 1 chargers, calculate the overall sales margin.
- What is the margin rate for a charger?
- Calculate the markup rate for the same product.
- Consider how margin rate impacts TechGadget's pricing decisions.
Proposed correction:
-
The unit margin is calculated by: Unit margin = PV HT – PA HT.
Let's substitute, Unit margin = €30 – €20 = €10.
So the unit margin per charger is €10. -
The overall sales margin is the unit margin multiplied by the number of chargers sold.
Let's calculate, €10 x €1 = €200.
The overall commercial margin for 1 chargers is €200. -
Use the formula: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
So, Margin rate = ((€30 – €20) ÷ €20) x 100 = 50%.
The margin rate for a shipper is 50%.
-
The formula for the markup rate is: Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100.
Calculating, Markup rate = ((€30 – €20) ÷ €30) x 100 = 33,33%.
The markup rate for a charger is 33,33%. -
The margin rate directly affects profits, and a high margin rate provides more flexibility to absorb unexpected costs or promotions.
TechGadget needs to ensure that its margin rate remains competitive while generating enough profits for future development of the range.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | PV HT – PA HT |
| Overall trade margin | Unit Margin x Quantity |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
Application: EcoFashion
States :
The company "EcoFashion", which markets clothing made from recycled fibers, has recently launched a limited collection of sustainable sweaters. They want to understand the impact of their costs and prices on the profitability of this new collection by analyzing the sales margin.
Work to do :
- Determine the unit margin if the selling price excluding tax of a sweater is €50 and the purchase price excluding tax is €35.
- If EcoFashion sells 800 sweaters, what is the overall sales margin?
- Calculate the margin rate of this sweater.
- What is the markup rate of this product?
- Discuss the impact of trade margins on EcoFashion’s strategic evolution.
Proposed correction:
-
The unit margin is determined by subtracting the purchase price excluding VAT from the selling price excluding VAT.
Therefore, Unit Margin = PV HT – PA HT = €50 – €35 = €15.
The sweater has a unit margin of €15. -
The overall sales margin is calculated by multiplying the unit margin by the number of sweaters sold.
Let's calculate, €15 x €800 = €12.
The overall sales margin for these sweaters is €12. -
The margin rate is obtained by: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
Doing the calculations, Margin rate = ((€50 – €35) ÷ €35) x 100 = 42,86%.
The margin rate for a sweater is 42,86%.
-
The markup rate is given by: Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100.
Let's calculate, Markup rate = ((€50 – €35) ÷ €50) x 100 = 30%.
The markup rate of a sweater is 30%. -
Trade margins influence EcoFashion's ability to reinvest in innovation and sustainable practices.
Strong margins ensure growth while supporting the company's green mission.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | PV HT – PA HT |
| Overall trade margin | Unit Margin x Quantity |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
App: Gourmet Delights
States :
"Gourmet Delights" is a gourmet restaurant that offers a new menu of elaborate desserts. The chef wants to evaluate the commercial margins of his creations in order to optimize the profitability of the restaurant.
Work to do :
- Calculate the unit margin if the selling price excluding tax of each dessert is €12 and the cost price excluding tax is €6.
- If the restaurant sells 300 desserts per month, what is the overall monthly sales margin?
- What is the margin rate for each dessert sold?
- Determine the markup rate for each dessert.
- Analyze the impact of high margins on the menu development strategy at “Gourmet Delights”.
Proposed correction:
-
Using the unit margin formula: Unit margin = PV excluding VAT – Cost price excluding VAT.
Unit margin = €12 – €6 = €6.
The unit margin per dessert is €6. -
The overall sales margin is the unit margin multiplied by the number of desserts sold.
Let's calculate, €6 x €300 = €1.
The overall monthly commercial margin is €1. -
Let’s use the formula: Margin rate = ((PV excluding VAT – Cost price excluding VAT) ÷ Cost price excluding VAT) x 100.
Let's calculate, Margin rate = ((€12 – €6) ÷ €6) x 100 = 100%.
The margin rate for each dessert is 100%.
-
The markup rate is given by: Markup rate = ((PV HT – Cost price HT) ÷ PV HT) x 100.
So, Markup Rate = ((€12 – €6) ÷ €12) x 100 = 50%.
The markup rate per dessert is 50%. -
High margins allow the restaurant to invest in premium ingredients and attract a high-end clientele.
This strategy also contributes to the awareness and brand image of “Gourmet Delights”.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | PV HT – Cost price HT |
| Overall trade margin | Unit Margin x Quantity |
| Margin rate | ((PV HT – Cost price HT) ÷ Cost price HT) x 100 |
| Brand taxes | ((PV HT – Cost price HT) ÷ PV HT) x 100 |
Application: Bio-Mart
States :
"Bio-Mart", a chain of organic food stores, has introduced a new line of cold-pressed juices. To better understand their profitability, management wants to calculate the different sales margins on these products.
Work to do :
- What is the unit margin if the selling price excluding tax of a liter of juice is €5 and the purchasing price excluding tax is €3?
- If the store sells 2 liters of juice per month, what is the overall monthly sales margin?
- Calculate the margin rate for each liter of juice sold.
- What is the markup rate for this product?
- Discuss how price positioning based on these margins influences the perception of quality at “Bio-Mart”.
Proposed correction:
-
The unit margin is calculated as follows: Unit margin = PV HT – PA HT.
Unit margin = €5 – €3 = €2.
The unit margin per litre of juice is €2. -
The overall sales margin is calculated by multiplying the unit margin by the quantity sold.
So, €2 x €2 = €500.
The overall monthly commercial margin is €5. -
Use the formula: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
So, Margin rate = ((€5 – €3) ÷ €3) x 100 = 66,67%.
The margin rate per liter of juice is 66,67%.
-
The markup rate is calculated with: Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100.
Calculating, Markup rate = ((€5 – €3) ÷ €5) x 100 = 40%.
The mark rate per liter of juice is 40%. -
These margins allow “Bio-Mart” to maintain an image of exclusive quality while offering significant value for an organic product.
The good balance of margins reflects the care taken in the quality of ingredients, thus reinforcing consumer confidence.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | PV HT – PA HT |
| Overall trade margin | Unit Margin x Quantity |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
Application: LumiTech
States :
“LumiTech” is a company specializing in smart LED lighting. To support the development of their latest connected bulbs, the company wants to evaluate the commercial margin of their sales in order to make informed decisions on their product expansion.
Work to do :
- Calculate the unit margin if the selling price excluding VAT of an LED bulb is €25 and the purchase price excluding VAT is €15.
- If “LumiTech” plans to sell 700 bulbs per month, what would be the overall monthly sales margin?
- Determine the margin rate for an LED bulb.
- What is the markup rate for this product from “LumiTech”?
- How could good margin control influence the innovation strategy at “LumiTech”?
Proposed correction:
-
The unit margin results from: Unit margin = PV HT – PA HT.
Let’s calculate, Unit margin = €25 – €15 = €10.
The LED bulb has a unit margin of €10. -
Let's multiply the unit margin by the number of bulbs planned for sale:
Overall commercial margin = €10 x 700 = €7.
The overall monthly commercial margin is €7. -
The margin rate uses the formula: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
So, Margin rate = ((€25 – €15) ÷ €15) x 100 = 66,67%.
The margin rate for a light bulb is 66,67%.
-
The markup rate is calculated as follows: Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100.
Substituting, Markup rate = ((€25 – €15) ÷ €25) x 100 = 40%.
The markup rate per ampoule is 40%. -
Strict margin management would allow LumiTech to reinvest in R&D, thereby improving the quality and functionality of their products.
It can also promote competitiveness in a market driven by technological innovation.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | PV HT – PA HT |
| Overall trade margin | Unit Margin x Quantity |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
Application: FitWear
States :
“FitWear” is a company specializing in eco-friendly sportswear. Before launching their new line of leggings, the FitWear team wants to evaluate the impact of pricing and cost decisions on their profitability through sales margins.
Work to do :
- Determine the unit margin if the selling price excluding tax of a pair of leggings is €40 and the manufacturing price excluding tax is €25.
- If 1 leggings are sold per month, what is the overall monthly sales margin?
- Calculate the margin rate for a legging.
- What is the markup rate for this FitWear product?
- How does the analysis of these margins guide FitWear's strategic choices in terms of distribution and marketing?
Proposed correction:
-
Use the formula: Unit margin = PV excluding VAT – Manufacturing price excluding VAT.
Let’s calculate, Unit margin = €40 – €25 = €15.
The unit margin per legging is €15. -
The overall sales margin is obtained by multiplying the unit margin by the number of leggings sold.
So, €15 x €1 = €000.
The overall monthly commercial margin is €15. -
The margin rate is calculated as: Margin rate = ((PV HT – Manufacturing price HT) ÷ Manufacturing price HT) x 100.
Doing the math, Margin Rate = ((€40 – €25) ÷ €25) x 100 = 60%.
The margin rate for leggings is 60%.
-
Let’s use the formula: Markup rate = ((PV excluding VAT – Manufacturing price excluding VAT) ÷ PV excluding VAT) x 100.
Let's calculate, Markup rate = ((€40 – €25) ÷ €40) x 100 = 37,5%.
The markup rate per legging is 37,5%. -
Margin analysis allows FitWear to position its products attractively, while ensuring sufficient profitability.
It also influences distribution decisions and marketing campaigns by highlighting the sustainable and qualitative aspects of the brand.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | PV HT – Manufacturing price HT |
| Overall trade margin | Unit Margin x Quantity |
| Margin rate | ((PV HT – Manufacturing price HT) ÷ Manufacturing price HT) x 100 |
| Brand taxes | ((PV HT – Manufacturing price HT) ÷ PV HT) x 100 |
Application: ArtGallery
States :
"ArtGallery" is a contemporary art gallery that organizes exhibitions and sells works by emerging artists. To optimize the profitability of their sales, they want to calculate the commercial margins of each painting sold.
Work to do :
- Calculate the unit margin if the selling price excluding tax of a painting is €2 and the acquisition cost is €000.
- If the gallery sells 15 paintings per month, what is the overall monthly sales margin?
- What is the margin rate for each painting sold?
- Calculate the markup rate for a painting.
- How do these margins influence the sales policy and the selection of artists at “ArtGallery”?
Proposed correction:
-
The unit margin is: Unit margin = PV excluding tax – Acquisition cost.
Let’s calculate, Unit margin = €2 – €000 = €1.
Each painting has a unit margin of €800. -
Let's multiply the unit margin by the number of paintings sold to get the overall sales margin.
Overall commercial margin = €800 x 15 = €12.
The overall monthly commercial margin is €12. -
Let's use the formula: Margin rate = ((PV HT – Acquisition cost) ÷ Acquisition cost) x 100.
So, Margin rate = ((€2 – €000) ÷ €1) x 200 = 1%.
The margin rate for each painting is 66,67%.
-
The markup rate is calculated as follows: Markup rate = ((PV HT – Acquisition cost) ÷ PV HT) x 100.
Let's calculate, Markup rate = ((€2 – €000) ÷ €1) x 200 = 2%.
The markup rate for a painting is 40%. -
High margins allow “ArtGallery” to financially support exhibitions and artistic events.
They also promote attractive collaborations with talented artists, thereby strengthening the gallery's reputation and appeal.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | PV HT – Acquisition cost |
| Overall trade margin | Unit Margin x Quantity |
| Margin rate | ((PV HT – Acquisition cost) ÷ Acquisition cost) x 100 |
| Brand taxes | ((PV HT – Acquisition cost) ÷ PV HT) x 100 |
Application: HealthVite
States :
"SantéVite" is a company specializing in the sale of natural food supplements. On the occasion of the launch of a new range of products, the team wishes to calculate the associated commercial margins to better align their pricing strategy and their sales objectives.
Work to do :
- What is the unit margin if the selling price excluding tax of a supplement is €30 and the purchasing price excluding tax is €18?
- If SantéVite plans to sell 2 units per month, what is the overall monthly sales margin?
- Calculate the margin rate for each supplement.
- Determine the markup rate for this product.
- How are these commercial margin calculations crucial for SantéVite’s financial forecasts?
Proposed correction:
-
Let’s calculate the unit margin with: Unit margin = PV HT – PA HT.
Unit margin = €30 – €18 = €12.
The unit margin per supplement is €12. -
The overall sales margin is obtained by multiplying the unit margin by the quantity sold.
So, Overall sales margin = €12 x €2 = €000.
The overall monthly commercial margin is €24. -
For the margin rate, let's use: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
Let's calculate, Margin rate = ((€30 – €18) ÷ €18) x 100 = 66,67%.
The margin rate per supplement is 66,67%.
-
The formula for the markup rate is: Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100.
Substituting, Markup rate = ((€30 – €18) ÷ €30) x 100 = 40%.
The markup rate for the supplement is 40%. -
These margin calculations determine break-even points and help SantéVite adjust its cash flow forecasts.
An accurate understanding of margins is essential for planning marketing campaigns and setting realistic profit goals.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | PV HT – PA HT |
| Overall trade margin | Unit Margin x Quantity |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |