In this section:
Application: Gourmet Catering
States :
Gourmet Restauration, a high-end gourmet caterer, offers buffets for events. Their latest product is a cold buffet at a unit purchase price in the form of a meal basket. The marketing department wants to calculate the margin on this new product to determine its effectiveness in the market.
Work to do :
- What is the selling price excluding tax if Gourmet Restauration wants to obtain a margin rate of 30% and the purchase price excluding tax is €50?
- If the quantity sold is 200 buffets, what is the overall margin achieved?
- We know that the selling price excluding tax is set at €80, so what is the markup rate?
- To maintain a margin rate of 30%, how much should the initially planned net selling price of €60 increase?
- Analyze what the overall margin would represent relative to total revenue in this context.
Proposed correction:
-
To obtain a margin rate of 30%, the applicable formula is:
PV excluding tax = PA excluding tax x (1 + Margin rate)
Replacing: €50 x (1 + 0,30) = €65
The selling price excluding tax must be €65 to achieve the desired margin rate. -
The unit margin is €15 (for a PV of €65 and a PA of €50).
The overall margin = €15 x €200 = €3
The overall margin achieved is therefore €3. -
The markup rate is calculated using the formula:
Brand rate = ((PV excluding tax – PA excluding tax) ÷ PV excluding tax) x 100
Replacing: ((€80 – €50) ÷ €80) x 100 = 37,5%
The markup rate is therefore 37,5%.
-
To maintain a margin rate of 30% with a PA of €50, the new PV excluding tax should be €50 x (1 + 0,30) = €65 (instead of €60).
So an increase of €65 – €60 = €5 is necessary. -
The total turnover with a PV excluding tax of €65 and 200 buffets sold would be €65 x 200 = €13.
The overall margin of €3 would represent approximately 000% of total turnover.
This shows that for every euro of turnover, the margin represents around 23 cents.
Formulas Used:
| Title | Formulas |
|---|---|
| Sales price excluding tax (PV excluding tax) | PV excluding tax = PA excluding tax x (1 + Margin rate) |
| Overall margin | Overall margin = Unit margin x Quantity |
| Brand taxes | Brand rate = ((PV excluding tax – PA excluding tax) ÷ PV excluding tax) x 100 |
Application: Tech Vulcan
States :
Tech Vulcan is a leading company in the innovative technology sector. In order to evaluate its products, it uses the calculation of the margin rate on its latest digital tablets. The purchase price of a tablet is €120 excluding VAT, and it is sold at €180 excluding VAT.
Work to do :
- Calculate the margin rate for this digital tablet.
- How much would the tablet have to sell for to achieve a 50% margin rate?
- If Tech Vulcan sells 500 tablets, what will the overall margin be?
- What adjustment would be necessary to obtain a markup rate of 40%?
- Discuss the strategic impact of the current margin rate on the company's competitiveness.
Proposed correction:
-
The formula for the margin rate is:
Margin rate = ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100
Replacing: ((€180 – €120) ÷ €120) x 100 = 50%
The margin rate is 50%. -
For a margin rate of 50%, the PV excluding tax must be:
PV excluding tax = PA excluding tax x (1 + Margin rate)
Replacing: €120 x (1 + 0,50) = €180
The tablet is already selling at the ideal price for a 50% margin rate. -
For a sale of 500 tablets with a unit margin of €60:
Unit margin = €180 – €120 = €60
Overall margin = €60 x 500 = €30
The overall margin will be €30.
-
To get a markup rate of 40%, let's use the formula:
Brand rate = ((PV excluding tax – PA excluding tax) ÷ PV excluding tax) x 100
PV HT = PA HT ÷ (1 – Mark rate)
Replacing: €120 ÷ (1 – 0,40) = €200
An adjustment of €200 – €180 = €20 would be necessary. -
The current margin rate of 50% shows a robust profitability per sale and attractive in terms of margins, but may raise questions about the competitive price compared to competitors.
In the long run, a balance between margin, competitive price and sales volume will decide Tech Vulcan's competitiveness.
Formulas Used:
| Title | Formulas |
|---|---|
| Margin rate | Margin rate = ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100 |
| Selling price excluding VAT (For a brand rate) | PV HT = PA HT ÷ (1 – Mark rate) |
| Overall margin | Overall margin = Unit margin x Quantity |
Application: Eco-Vest Ensemble
States :
Éco-Vest Ensemble is a young company specializing in sustainable fashion. Complementing its collection, a recycled cotton coat has just been launched. The management is interested in calculating profitability by margin to better set its prices. The purchase price of the coat is set at €70 excluding VAT.
Work to do :
- If Eco-Vest Ensemble wants a margin rate of 40%, at what price HT should it sell the coat?
- Let’s calculate the unit margin if the selling price excluding tax is set at €100.
- To maximize their profitability, Eco-Vest sells 300 coats; what is the overall margin?
- What would be the selling price excluding tax to obtain a markup rate of 35%?
- Analyze the importance of a sufficient margin rate to support the company's ethical and sustainable values.
Proposed correction:
-
The formula for the selling price excluding tax for a margin rate of 40% is:
PV excluding tax = PA excluding tax x (1 + Margin rate)
Replacing: €70 x (1 + 0,40) = €98
The selling price excluding VAT should be €98. -
The unit margin can be determined by the difference between PV HT and PA HT:
Unit margin = PV excluding tax – PA excluding tax
Replacing: €100 – €70 = €30
Each coat generates a margin of €30. -
If 300 coats are sold:
Overall margin = €30 x 300 = €9
Eco-Vest achieves an overall margin of €9.
-
Finding a selling price excluding tax for a markup rate of 35% requires this formula:
PV HT = PA HT ÷ (1 – Mark rate)
Replacing: €70 ÷ (1 – 0,35) = €107,69 (approximately €107,70)
A price of €107,70 is required. -
A strong margin rate ensures resources for sustainable production practices.
By maintaining margins, Eco-Vest can support initiatives that honor its ethical values.
Formulas Used:
| Title | Formulas |
|---|---|
| Selling price excluding tax | PV excluding tax = PA excluding tax x (1 + Margin rate) |
| Unit margin | Unit margin = PV excluding tax – PA excluding tax |
| Overall margin | Overall margin = Unit margin x Quantity on sale |
| Selling price excluding VAT (Market rate) | PV HT = PA HT ÷ (1 – Mark rate) |
Application: Gentle Meditation
States :
Méditation Douce offers a range of wellness products, including a premium meditation cushion made from eco-friendly materials. At the moment, the manager is looking to assess profitability using the commercial margins of these cushions which have a purchase price excluding VAT of €30.
Work to do :
- What selling price excluding tax should be chosen to achieve a margin rate of 60%?
- Knowing that the selling price excluding tax is set at €48, what is the unit margin obtained?
- Meditation Douce sells 400 cushions; what is the overall margin?
- What would be the selling price excluding tax required to establish a markup rate of 45%?
- Discuss the key role of high margin for the economic sustainability of the business in the wellness industry.
Proposed correction:
-
The calculation to achieve a 60% margin rate is:
PV excluding tax = PA excluding tax x (1 + Margin rate)
Substituting: €30 x (1 + 0,60) = €48
The PV excluding tax should be €48. -
For the unit margin when the PV excluding tax is €48, we use:
Unit margin = PV excluding tax – PA excluding tax
Replacing: €48 – €30 = €18
A unit margin of €18 is generated per cushion. -
Overall margin for 400 cushions:
Overall margin = €18 x 400 = €7
The overall margin therefore reaches €7.
-
Calculation of the PV excluding tax for a markup rate of 45%:
PV HT = PA HT ÷ (1 – Mark rate)
Replacing: €30 ÷ (1 – 0,45) = €54,54 (approximately €54,55)
The selling price excluding tax should be set at around €54,55. -
High margins are crucial for investing in new offerings and improving quality and service.
By adopting this strategy, Méditation Douce will be able to strengthen its position in the wellness market.
Formulas Used:
| Title | Formulas |
|---|---|
| Selling price excluding tax | PV excluding tax = PA excluding tax x (1 + Margin rate) |
| Unit margin | Unit margin = PV excluding tax – PA excluding tax |
| Overall margin | Overall margin = Unit margin x Quantity on sale |
| Selling price excluding VAT (Brand) | PV HT = PA HT ÷ (1 – Mark rate) |
Application: Zen Garden
States :
Jardin Zen is a young and growing company specializing in the development of quiet spaces with minimalist garden decoration items. Recently, the team has been wondering about the benefit of the relaxing statuettes they buy at a purchase price excluding tax of €20.
Work to do :
- How much should they sell a statuette for excluding tax to obtain a margin rate of 70%?
- By setting the selling price excluding tax at €34, what unit margin will this solution bring?
- If Jardin Zen sells 800 statuettes, what overall margin will be obtained?
- For a markup rate of 50%, what selling price excluding tax would you choose?
- Explain the strategic benefits that a high margin rate could inject into future stages of the business.
Proposed correction:
-
With a margin rate of 70%, the formula used is:
PV excluding tax = PA excluding tax x (1 + Margin rate)
As a replacement: €20 x (1 + 0,70) = €34
The selling price excluding VAT must be €34. -
The margin for a PV excluding tax of €34:
Unit margin = PV excluding tax – PA excluding tax
Replacing: €34 – €20 = €14
Per statuette, Jardin Zen achieves a unit margin of €14. -
Overall margin, given the sale of 800 statuettes:
Overall margin = €14 x 800 = €11
This totals an overall margin of €11.
-
To achieve a 50% markup rate:
PV HT = PA HT ÷ (1 – Mark rate)
Replacing: €20 ÷ (1 – 0,50) = €40
The asking price excluding tax would be €40. -
A high margin rate promotes the ability to finance product expansion and innovation.
A sustainably positive strategy, Jardin Zen could thus strengthen its competitive advantage.
Formulas Used:
| Title | Formulas |
|---|---|
| Selling price excluding tax | PV excluding tax = PA excluding tax x (1 + Margin rate) |
| Unit margin | Unit margin = PV excluding tax – PA excluding tax |
| Overall margin | Overall margin = Unit margin x Quantity on sale |
| Selling price excluding VAT (Brand) | PV HT = PA HT ÷ (1 – Mark rate) |
Application: TechFlow Innovation
States :
TechFlow Innovation, which specializes in new generation air purification systems, designs a unit with a purchase cost of €300. The director wants to optimize pricing strategies using the margin to strengthen their position in the green technology market.
Work to do :
- What selling price excluding tax would allow a margin rate of 80% to be obtained?
- If the selling price excluding tax is set at €500, determine the possible unit margin.
- By selling 250 units, what will be the overall margin generated?
- For a markup rate of 55%, what should the selling price excluding tax be?
- Analyze the effect of such a margin on TechFlow Innovation's strategic position vis-à-vis the competition.
Proposed correction:
-
Calculate the PV HT for a margin rate of 80%:
PV excluding tax = PA excluding tax x (1 + Margin rate)
Replacing: €300 x (1 + 0,80) = €540
The required selling price excluding VAT is €540. -
The unit margin at a PV excluding tax of €500 is calculated by:
Unit margin = PV excluding tax – PA excluding tax
Replacing: €500 – €300 = €200
TechFlow Innovation achieves a unit margin of €200. -
With 250 units sold:
Overall margin = €200 x 250 = €50
The overall margin will therefore be €50.
-
Selling price excluding VAT for a mark-up rate of 55%:
PV HT = PA HT ÷ (1 – Mark rate)
Substituting: €300 ÷ (1 – 0,55) = €666,67
To reach the rate, €666,67 is the required PV. -
An ambitious margin rate creates value and strengthens TechFlow Innovation's lead over its peers.
This approach supports financial flexibility and future investments in R&D.
Formulas Used:
| Title | Formulas |
|---|---|
| Selling price excluding tax | PV excluding tax = PA excluding tax x (1 + Margin rate) |
| Unit margin | Unit margin = PV excluding tax – PA excluding tax |
| Overall margin | Overall margin = Unit margin x Quantity on sale |
| Selling price excluding VAT (Brand) | PV HT = PA HT ÷ (1 – Mark rate) |
Application: BioSnack Inspiratio
States :
BioSnack Inspiratio, a producer of organic snacks, has just launched a new range of energy bars. Each unit is purchased at €3 excluding VAT. The financial director must decide on the selling prices on the market based on strategic margins.
Work to do :
- What should the selling price excluding tax be to achieve a margin rate of 25%?
- Selling each bar at €4,50 excluding VAT, what is the unit margin?
- If 10 bars are sold, what is the overall margin?
- What selling price excluding VAT would be required for a 15% markup rate?
- Consider how margins contribute to business sustainability and market acceptance of the product.
Proposed correction:
-
To get 25% margin, the formula is:
PV excluding tax = PA excluding tax x (1 + Margin rate)
Replacing: €3 x (1 + 0,25) = €3,75
Therefore, the necessary selling price excluding VAT is €3,75. -
The unit margin for a PV excluding tax of €4,50:
Unit margin = PV excluding tax – PA excluding tax
Replacing: €4,50 – €3 = €1,50
The bar therefore generates €1,50 of margin per unit. -
For 10 bars, the overall margin is:
Total margin = €1,50 x €10 = €000
Which gives an overall margin of €15.
-
Adjustment for a 15% markup rate:
PV HT = PA HT ÷ (1 – Mark rate)
Replacing: €3 ÷ (1 – 0,15) = €3,53
So a price of €3,53 would be required. -
Margins define both financial stability and price competitiveness.
Through a thoughtful pricing strategy, BioSnack Inspiratio can stimulate excitement for its new range while strengthening its sustainability.
Formulas Used:
| Title | Formulas |
|---|---|
| Selling price excluding tax | PV excluding tax = PA excluding tax x (1 + Margin rate) |
| Unit margin | Unit margin = PV excluding tax – PA excluding tax |
| Overall margin | Overall margin = Unit margin x Quantity on sale |
| Selling price excluding VAT (Brand) | PV HT = PA HT ÷ (1 – Mark rate) |
Application: Zenith Food
States :
Zenith Alimentaire, a food wholesaler, is planning to launch a batch of culinary preparations. Each unit of a prepared dish is purchased for €5 excluding VAT. The company's main objective is to examine its margins to better understand its financial flows.
Work to do :
- How much increase in the selling price would you need to apply to obtain a margin rate of 20%?
- Determine the unit margin if the PV excluding tax is set at €6,50.
- For a sale of 5 lots, what will the overall margin be?
- What is the PV excluding tax to set to obtain a markup rate of 10%?
- Analyze the potential impact of margins on the company's overall profitability and operating margins.
Proposed correction:
-
Calculation of the PV excluding tax for 20% margin:
PV excluding tax = PA excluding tax x (1 + Margin rate)
Replacing: €5 x (1 + 0,20) = €6
So an increase of €6 – €5 = €1 is necessary. -
The unit margin for a PV excluding tax of €6,50:
Unit margin = PV excluding tax – PA excluding tax
Replacing: €6,50 – €5 = €1,50
The unit margin is then €1,50. -
With 5 lots sold, the overall margin is:
Total margin = €1,50 x €5 = €000
Which leads to an overall margin of €7.
-
For a markup rate of 10%, the calculation is:
PV HT = PA HT ÷ (1 – Mark rate)
Replacing: €5 ÷ (1 – 0,10) = €5,56
The selling price excluding tax must therefore be set at €5,56. -
By optimizing margins, Zenith Alimentaire can solidify its financial base and stabilize its operations.
Effective margin management is essential for sustainable profitability in a competitive market.
Formulas Used:
| Title | Formulas |
|---|---|
| Selling price excluding tax | PV excluding tax = PA excluding tax x (1 + Margin rate) |
| Unit margin | Unit margin = PV excluding tax – PA excluding tax |
| Overall margin | Overall margin = Unit margin x Quantity on sale |
| Selling price excluding VAT (Brand) | PV HT = PA HT ÷ (1 – Mark rate) |
Application: EcoSmart Solutions
States :
EcoSmart Solutions, a company specializing in ecological gadgets, is preparing to market a portable water purifier. The purchase cost excluding tax of a unit is €50. The sales manager is considering setting up appropriate margins to ensure financial growth and competitiveness.
Work to do :
- At what selling price excluding VAT should it be sold for a margin rate of 35%?
- If the selling price excluding tax is set at €70, what unit margin will be achieved?
- If we plan to sell 1 units, what will the overall margin be?
- What selling price excluding tax should be chosen to achieve a markup rate of 25%?
- Discussion: How do margins influence EcoSmart Solutions' positioning and long-term strategies?
Proposed correction:
-
For a margin rate of 35%, the formula is:
PV excluding tax = PA excluding tax x (1 + Margin rate)
Replacing: €50 x (1 + 0,35) = €67,50
The selling price excluding VAT should therefore be €67,50. -
Let’s calculate the unit margin for a PV excluding tax of €70:
Unit margin = PV excluding tax – PA excluding tax
Replacing: €70 – €50 = €20
The unit margin will then be €20. -
For a sale of 1 units, the overall margin is:
Total margin = €20 x €1 = €000
This amount corresponds to an overall margin of €20.
-
To obtain a markup rate of 25%, we use:
PV HT = PA HT ÷ (1 – Mark rate)
Replacing: €50 ÷ (1 – 0,25) = €66,67
A sale price of €66,67 would be required. -
Margins define EcoSmart's ability to invest in research and development to anticipate market needs.
Maintaining adequate margins supports the strategy of sustainable growth and innovation.
Formulas Used:
| Title | Formulas |
|---|---|
| Selling price excluding tax | PV excluding tax = PA excluding tax x (1 + Margin rate) |
| Unit margin | Unit margin = PV excluding tax – PA excluding tax |
| Overall margin | Overall margin = Unit margin x Quantity on sale |
| Selling price excluding VAT (Brand) | PV HT = PA HT ÷ (1 – Mark rate) |