In this section:
Application: Good Cooking
States :
La Bonne Cuisine, a French gastronomy restaurant, wants to analyze its pricing strategy in order to improve its profitability. The chef is particularly interested in the financial performance of his most popular dish: the "Coq au Vin". The total cost price of this dish (CA excluding VAT) is €15 and the restaurant offers this dish at a price excluding VAT of €30.
Work to do :
- Calculate the unit margin and the margin rate for the “Coq au Vin” dish.
- If the restaurant wants to increase the margin rate to 60%, what should the new selling price excluding tax be?
- La Bonne Cuisine sold 200 “Coq au Vin” dishes last month. What was the overall margin achieved?
- Determine the current markup rate for “Coq au Vin”.
- What impact would a 10% reduction in the selling price have on the margin rate? Analyze the strategic implications of this change.
Proposed correction:
-
To calculate the unit margin, we use the formula: Unit margin = PV HT – PA HT.
As a replacement, €30 – €15 = €15.
The margin rate is given by: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
Replacing, ((€30 – €15) ÷ €15) x 100 = 100%.
The unit margin is €15 and the current margin rate is 100%. -
To achieve a margin rate of 60%, we use the formula:
PV HT = PA HT x (1 + (Margin rate ÷ 100)).
By replacing, €15 x (1 + 0,60) = €24.
The selling price excluding tax should be €24 to achieve a margin rate of 60%. -
The overall margin is calculated as follows: Overall margin = Unit margin x quantity sold.
Replacing, €15 x 200 = €3.
The overall margin made on sales of “Coq au Vin” is €3.
-
The markup rate is calculated by the formula: Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100.
Replacing, ((€30 – €15) ÷ €30) x 100 = 50%.
The current markup rate for “Coq au Vin” is 50%. -
A 10% reduction in the sale price would bring the sale price to: €30 – (10% of €30) = €27.
The new margin rate with this sale price would be: Margin rate = ((€27 – €15) ÷ €15) x 100 = 80%.
The price reduction results in a decrease in the margin rate to 80%. Strategically, this price reduction could boost sales, but it also reduces the margin per unit, which could negatively affect overall profitability if sales volume does not increase sufficiently.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | PV HT – PA HT |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Overall margin | Unit margin x quantity sold |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
| New PV for TM | PA HT x (1 + (Margin rate ÷ 100)) |
Application: The Gourmet Terroir
States :
Le Gourmet Terroir is a bistro known for its regional dishes. The "Cassoulet du Sud-Ouest" is one of its flagship dishes. The purchase cost of this dish (PA HT) is €12, and it is sold at a price HT of €25.
Work to do :
- Determine the unit margin and the margin rate of “Cassoulet du Sud-Ouest”.
- What selling price excluding tax would allow a markup rate of 40% to be obtained?
- Assuming the sale of 150 “Cassoulets du Sud-Ouest” in one week, what is the overall margin for this period?
- Calculate the current markup rate.
- Discuss the financial implications of a 20% price increase on margin and customer perception.
Proposed correction:
-
The unit margin is calculated by: Unit margin = PV HT – PA HT.
As a replacement, €25 – €12 = €13.
The margin rate is: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
Replacing, ((€25 – €12) ÷ €12) x 100 = 108,33%.
The unit margin is €13 and the margin rate is 108,33%. -
To achieve a 40% markup rate, we use:
PV HT = PA HT ÷ (1 – Mark rate).
Substituting, €12 ÷ (1 – 0,40) = €20.
The selling price excluding tax for a markup rate of 40% would be €20. -
The overall margin is calculated by: Overall margin = Unit margin x quantity sold.
Replacing, €13 x 150 = €1.
The overall margin for the week is €1.
-
The current mark rate is given by: Mark rate = ((PV HT – PA HT) ÷ PV HT) x 100.
Replacing, ((€25 – €12) ÷ €25) x 100 = 52%.
The current markup rate is therefore 52%. -
A 20% price increase would bring the selling price to:
€25 + (20% of €25) = €30.
The new margin rate would be: ((€30 – €12) ÷ €12) x 100 = 150%.
Financially, this increase would improve the margin rate, rising to 150%. However, it could influence the customer's perception in terms of value for money, which could affect demand.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | PV HT – PA HT |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
| Overall margin | Unit margin x quantity sold |
| New PV for TM | PA HT ÷ (1 – Mark rate) |
Application: Timeless Bistro
States :
The Bistro Intemporel, which specializes in fusion cuisine, offers a popular starter called “Ravioles aux Champignons Sauvages”. The purchase price excluding tax (PA HT) of this dish is €8, and it is sold at a price excluding tax of €18.
Work to do :
- Calculate the unit margin and margin rate for “Wild Mushroom Ravioles”.
- What selling price excluding tax would allow a margin of €12 per dish sold?
- During the last month, 300 dishes of “Ravioles” were sold. Calculate the overall margin for this period.
- Determine the current markup rate.
- What effect would a 15% increase in purchasing costs have on the margin rate?
Proposed correction:
-
The unit margin is calculated as follows: Unit margin = PV HT – PA HT.
As a replacement, €18 – €8 = €10.
The margin rate is calculated as follows: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
Replacing, ((€18 – €8) ÷ €8) x 100 = 125%.
The unit margin is €10 and the margin rate is 125%. -
To have a margin of €12, we use the following formula: PV HT = PA HT + Desired unit margin.
By replacing, €8 + €12 = €20.
A sales price excluding tax of €20 is required to obtain a margin of €12 per dish. -
The overall margin is given by: Overall margin = Unit margin x quantity sold.
Replacing, €10 x 300 = €3.
The overall margin for the month is €3.
-
The current markup rate is: Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100.
Replacing, ((€18 – €8) ÷ €18) x 100 = 55,56%.
The current markup rate is 55,56%. -
If purchasing costs increase by 15%, the new PA excluding tax will be: €8 + (15% of €8) = €9,2.
The new margin rate would be: ((€18 – €9,2) ÷ €9,2) x 100 = 95,65%.
Increasing purchasing costs reduce the margin rate, which can impact profitability unless the selling price is adjusted accordingly.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | PV HT – PA HT |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Overall margin | Unit margin x quantity sold |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
| New PV for margin | PA HT + Desired unit margin |
Application: Organic Vegan Coffee
States :
Café Bio Végan is a modern establishment offering entirely vegan cuisine. The “Leguminosae Burger” is one of their best-selling dishes. It costs €7 to produce (PA excluding VAT) and is sold at a price excluding VAT of €15.
Work to do :
- Calculate the unit margin and the margin rate of the “Leguminosae Burger”.
- Determine the new selling price excluding VAT if the café wishes to maintain the same margin rate while production costs increase by 25%.
- What is the overall margin if 250 Burgers were sold in one day?
- Calculate the current markup rate for the “Legumin Burger”.
- Analyze the potential impact of adjusting the selling price to €20 on demand and customer perception.
Proposed correction:
-
We calculate the unit margin by: Unit margin = PV HT – PA HT.
As a replacement, €15 – €7 = €8.
The margin rate using the formula: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
Replacing, ((€15 – €7) ÷ €7) x 100 = 114,29%.
Thus, the unit margin is €8 and the margin rate is 114,29%. -
If costs increase by 25%, the new PA excluding tax will be: €7 + (25% of €7) = €8,75.
To maintain the same margin rate, the new PV HT must respect: PV HT = PA HT x (1 + (Margin rate ÷ 100)).
By replacing, €8,75 x (1 + 1,1429) = €18,75.
The new selling price excluding tax should be €18,75 to maintain the margin rate. -
The overall margin is: Overall margin = Unit margin x quantity sold.
Replacing, €8 x 250 = €2.
The overall margin for this day is €2.
-
The current markup rate: Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100.
Replacing, ((€15 – €7) ÷ €15) x 100 = 53,33%.
Currently, the markup rate is 53,33%. -
Increasing the selling price to €20 will change the margin rate: ((€20 – €7) ÷ €7) x 100 = 185,71%.
While the increase improves margin, it could also decrease demand, as customer perceptions of value for money could change. It is essential to assess whether the market can absorb this additional cost without a major impact on sales.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | PV HT – PA HT |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Overall margin | Unit margin x quantity sold |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
| New PV for TM | PA HT x (1 + (Margin rate ÷ 100)) |
Application: Traditional Rotisserie
States :
La Rôtisserie Tradition, specializing in takeaway meals, offers a famous “Chicken Roast”. The cost of production excluding tax (PA HT) is €10, and the current sale price excluding tax is €25.
Work to do :
- What is the unit margin and margin rate of “Roast Chicken”?
- If the rotisserie wants to reduce the selling price excluding tax to obtain a mark-up rate of 30%, what should this new price be?
- What would be the financial impact of selling 1000 chickens per month?
- Calculate the current markup rate of “Roast Chicken”.
- Estimate the effect of a 5% decrease in production cost on the margin rate.
Proposed correction:
-
Unit margin is given by: Unit margin = PV HT – PA HT.
As a replacement, €25 – €10 = €15.
Margin rate: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
Replacing, ((€25 – €10) ÷ €10) x 100 = 150%.
The unit margin is €15 with a margin rate of 150%. -
A markup rate of 30% uses: PV HT = PA HT ÷ (1 – Markup rate).
Substituting, €10 ÷ (1 – 0,30) = €14,29.
The new selling price excluding VAT for a markup rate of 30% would be €14,29. -
The overall margin is: Overall margin = Unit margin x quantity sold.
Replacing, €15 x 1000 = €15.
The income from selling 1000 chickens is €15.
-
Calculation of the markup rate: Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100.
Replacing, ((€25 – €10) ÷ €25) x 100 = 60%.
The markup rate is 60%. -
A 5% reduction in the production cost would bring the new PA excluding tax to: €10 – (5% of €10) = €9,5.
The margin rate would then be: ((€25 – €9,5) ÷ €9,5) x 100 = 163,16%.
With reduced cost, margin is better, allowing more strategic flexibility without significantly altering margins.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | PV HT – PA HT |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Overall margin | Unit margin x quantity sold |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
| New PV for TM | PA HT ÷ (1 – Mark rate) |
Application: Exquisite Tapas
States :
Tapas Exquis is a popular tapas bar, offering a “Plateau de Serrano” sold at a price excluding VAT of €22. The preparation cost (PA excluding VAT) is €11.
Work to do :
- Calculate the unit margin and the margin rate for the “Serrano Plateau”.
- If Tapas Exquis wants a new markup rate of 25%, at what selling price excluding VAT should it be offered?
- What is the total profit from selling 500 trays last month?
- Analyze the current markup of the “Plateau de Serrano”.
- What impact would the introduction of a new promotion with a 20% discount on the PV excluding VAT have on the unit margin?
Proposed correction:
-
Using the unit margin formula: Unit margin = PV HT – PA HT.
As a replacement, €22 – €11 = €11.
Margin rate: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
Replacing, ((€22 – €11) ÷ €11) x 100 = 100%.
So the unit margin is €11, and the margin rate is 100%. -
For a markup rate of 25%, find the selling price excluding tax with: PV excluding tax = PA excluding tax ÷ (1 – Markup rate).
Substituting, €11 ÷ (1 – 0,25) = €14,67.
The “Plateau de Serrano” should be sold at a price excluding VAT of €14,67 to achieve a mark-up rate of 25%. -
The total profit for the sale of 500 trays, calculated by the overall margin:
Overall margin = Unit margin x quantity sold.
Replacing, €11 x 500 = €5.
Thus, the total profit reaches €5.
-
The markup rate is given by: Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100.
Replacing, ((€22 – €11) ÷ €22) x 100 = 50%.
The mark rate of the “Plateau de Serrano” remains at 50%. -
A 20% reduction on the PV excluding VAT would be: €22 – (20% of €22) = €17,60.
The new unit margin: €17,60 – €11 = €6,60.
The introduction of this reduction significantly reduces the unit margin, requiring an analysis to balance sales volume and profitability.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | PV HT – PA HT |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Overall margin | Unit margin x quantity sold |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
| New PV for TM | PA HT ÷ (1 – Mark rate) |
Application: Italian Pasta
States :
Pâtes d'Italie is a restaurant offering authentic pasta dishes such as the "Penne aux Truffes". This one is produced for €17 (PA excluding VAT) and sold at a price of €35 excluding VAT.
Work to do :
- What is the unit margin and margin rate for the “Penne aux Truffes” dish?
- If the goal is to lower the markup rate to 45%, what would be the new selling price excluding tax?
- The restaurant wants to offer a special promotion with 2 dishes for the price of 1,5. Analyze the effect on the unit margin.
- Calculate the markup rate for “Penne aux Truffes”.
- Discuss the financial impact of doubling sales as a result of the promotion.
Proposed correction:
-
Unit margin: use Unit margin = PV HT – PA HT.
As a replacement, €35 – €17 = €18.
Margin rate: calculated with Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
Replacing, ((€35 – €17) ÷ €17) x 100 = 105,88%.
The unit margin is €18, and the margin rate is 105,88%. -
For a markup rate of 45%, calculate: PV HT = PA HT ÷ (1 – Markup rate).
Substituting, €17 ÷ (1 – 0,45) = €30,91.
The new selling price excluding tax would be €30,91 to comply with this rate. -
With 2 dishes for 1,5, the customer pays: €35 x 1,5 = €52,5 for 2 dishes.
Newly calculated, the unit margin changes to: (€52,5 ÷ 2) – €17 = €9,25 per dish.
The offer reduces the margin, but must be balanced with the announced volume effect.
-
Calculation of the markup rate: Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100.
Replacing, ((€35 – €17) ÷ €35) x 100 = 51,43%.
The product's markup rate is 51,43%. -
Doubling sales to 200 dishes would bring the overall margin to:
€9,25 x 200 = €1 (promotional average).
The increased volume can offset the unit decline if the strategy attracts enough new customers and builds loyalty by generating rush.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | PV HT – PA HT |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Overall margin | Unit margin x quantity sold |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
| New PV for TM | PA HT ÷ (1 – Mark rate) |
Application: Sushi Culture
States :
Sushi Culture offers the "Dragon Roll Special" at a cost of €12 (PA excluding VAT) and a sale price of €28 excluding VAT. The restaurant has a large clientele and wants to optimize its profitability.
Work to do :
- Calculate the unit margin and margin rate of the “Dragon Roll Special”.
- If VAT is increased to 5,5%, what is the current sales price including VAT?
- Imagine that costs increase by 10% and assess the new impact on the margin rate.
- With 400 sushi sales per week, estimate the monthly contribution using the current price.
- Consider the strategic implications of immediate consumption and online sales in the face of these margins.
Proposed correction:
-
The unit margin is obtained with: Unit margin = PV HT – PA HT.
As a replacement, €28 – €12 = €16.
The margin rate is explained by: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
Replacing, ((€28 – €12) ÷ €12) x 100 = 133,33%.
Thus, the unit margin is €16 and the margin rate is 133,33%. -
The calculation including tax: Price including tax = PV excluding tax x (1 + 0,055).
Replacing, €28 x 1,055 = €29,54.
The “Dragon Roll Special” is sold for €29,54 including VAT at this VAT rate. -
With a 10% increase in costs: new PA excluding tax = €12 x 1,1 = €13,2.
The new margin rate will be: ((€28 – €13,2) ÷ €13,2) x 100 = 112,12%.
An increase in costs reduces the margin rate, and sales strategies must be adapted.
-
Monthly sales (400 x 4 weeks), calculate contribution by: Overall margin = Unit margin x quantity sold.
Replacing, €16 x (400 x 4) = €25.
Thus, the total monthly contribution is €25. -
The strategic developments induced by online sales make it possible to envisage stability and customer accessibility. With a margin that encourages the evaluation of delivery and discount fees, the adaptability and service optimized by non-binding options further promote better loyalty, even outside of the physical restaurant.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | PV HT – PA HT |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Overall margin | Unit margin x quantity sold |
| All taxes included price | PV excluding VAT x (1 + VAT rate) |
Application: Gourmet Dessert
States :
Dessert Gourmet, a high-end pastry shop, offers the famous “Chocolate Éclair” at a price excluding tax of €5 for a manufacturing cost of €2. The management is aiming for significant growth for the summer period.
Work to do :
- Calculate the unit margin and the margin rate for a “Chocolate Éclair”.
- With the addition of €0,50 extra cost for a deluxe version, what is the impact on the unit margin?
- Estimate the overall margin for a production of 1 units at the current price.
- Evaluate whether maintaining a VAT rate of 20% significantly affects the customer's final price.
- Discuss a strategy to increase market share without reducing perceived quality or margin.
Proposed correction:
-
For the unit margin: Unit margin = PV HT – PA HT.
As a replacement, €5 – €2 = €3.
And the margin rate: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
Replacing, ((€5 – €2) ÷ €2) x 100 = 150%.
The “Chocolate Eclair” has a unit margin of €3 and the margin rate reaches 150%. -
New deluxe version: cost PA excluding tax = €2 + €0,50 = €2,50.
New unit margin should be: €5 – €2,50 = €2,50.
Adding luxury directly impacts unit margin, requiring either a price increase or a strategic review. -
The overall margin for 1 éclairs remains valid by: Overall margin = Unit margin x quantity sold.
By replacing, €3 x €1 = €000.
The overall margin is €3 for this production.
-
The final price including tax: Price including tax = PV excluding tax x (1 + 0,20).
Replacing, €5 x 1,20 = €6.
VAT brings the final customer price to €6, which remains consistent with customer perception if included in the premium positioning. -
Expanding market share would require limited launches, promoting growing awareness and free trials to a large audience while driving product excitement. Maximizing social networks and class partnerships to increase visibility and top-of-mind would allow reaching a wider range of potential customers without affecting product quality or reducing strategic margin.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | PV HT – PA HT |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Overall margin | Unit margin x quantity sold |
| All taxes included price | PV excluding VAT x (1 + VAT rate) |