In this section:
- Application: Gourmet Butchery
- Application: Butcher's Shop Flavor of Yesteryear
- Application: The Farm Butcher's Shop
- Application: Southern Artisanal Butchery
- Application: Essential Organic Butchery
- Application: Traditional Bordeaux Butchery
- Application: Mountain Butchery
- Application: Butchery of Provençal Flavors
- Application: Traditional and Prestige Butchery
Application: Gourmet Butchery
States :
La Boucherie Gourmande, located in the heart of Bordeaux, offers premium quality meats, including Charolais beef. The manager wants to know different margins on his sales in order to evaluate the profitability of his business. Here is the data concerning his latest transactions:
- Purchase price excluding tax for a kilo of Charolais beef: €18.
- Selling price excluding tax for a kilo of Charolais beef: €33.
- Quantity sold during the week: 150 kg.
Work to do :
- Calculate the unit margin per kilo of Charolais beef.
- Determine the overall margin made by Boucherie Gourmande on this sale.
- Calculate the margin rate on this sale of Charolais beef.
- Determine the markup rate for this sale.
- Analyze the relevance of the margin rate versus the markup rate in this situation.
Proposed correction:
To calculate the unit margin, simply subtract the purchase price excluding VAT from the sale price excluding VAT:
Unit margin = PV excluding tax – PA excluding tax
Unit margin = €33 – €18 = €15
The unit margin is therefore €15 per kilo of Charolais beef.The overall margin is calculated by multiplying the unit margin by the quantity sold:
Overall margin = Unit margin x Quantity sold
Overall margin = €15 x 150 kg = €2
La Boucherie Gourmande therefore achieved an overall margin of €2 on the sale of beef.The margin rate is given by the formula:
Margin rate = ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100
Margin rate = ((€33 – €18) ÷ €18) x 100 = 83,33%
The margin rate on this sale is 83,33%.
The markup rate is calculated as follows:
Brand rate = ((PV excluding tax – PA excluding tax) ÷ PV excluding tax) x 100
Brand rate = ((€33 – €18) ÷ €33) x 100 = 45,45%
The markup rate on Charolais beef sales is 45,45%.The margin rate is significantly higher than the brand rate, which is normal. This means that Boucherie Gourmande generates high profitability compared to its purchasing costs while having a relatively pragmatic sales strategy (reasonable sales price compared to the 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 |
Application: Butcher's Shop Flavor of Yesteryear
States :
Boucherie Saveur d'Antan, which specializes in the sale of organic meats, wants to estimate its performance in detail. The head butcher provides you with the following information for his lamb sale this week:
- Purchase price excluding tax of organic lamb per kilo: €22.
- Selling price excluding tax per kilo of organic lamb: €39.
- Total quantity sold: 120 kg.
Work to do :
- First, calculate the unit margin achieved for a kilo of organic lamb.
- Then establish the overall margin made by the butcher on 120 kg of lamb.
- Calculate the margin rate on this week's sale of organic lamb.
- Also calculate the markup rate.
- Based on the results, consider whether or not you can slightly increase the net selling price to improve the overall margin.
Proposed correction:
The unit margin is obtained by subtracting the purchase price excluding VAT from the sale price excluding VAT:
Unit margin = PV excluding tax – PA excluding tax
Unit margin = €39 – €22 = €17
The unit margin is therefore €17 per kilo of organic lamb.To calculate the overall margin:
Overall margin = Unit margin x Quantity sold
Overall margin = €17 x 120 kg = €2
The butcher's shop made an overall margin of €2.The margin rate is calculated as follows:
Margin rate = ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100
Margin rate = ((€39 – €22) ÷ €22) x 100 = 77,27%
The margin rate on the sale of organic lamb is 77,27%.
For the mark rate:
Brand rate = ((PV excluding tax – PA excluding tax) ÷ PV excluding tax) x 100
Brand rate = ((€39 – €22) ÷ €39) x 100 = 43,59%
The mark rate achieved is 43,59%.The unit margin, although positive, could be increased by slightly adjusting the selling price, provided that the local market accepts this adjustment without a drop in demand.
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: The Farm Butcher's Shop
States :
The Butcher's Shop, located on the outskirts of Lyon, sells large quantities of farm-raised pork. The manager wants to know if he could better manage his margins. Here is the information provided:
- Purchase price excluding tax for a kilo of farm-raised pork: €15.
- Selling price excluding tax for a kilo of farm pork: €28.
- Quantity sold: 200 kg.
Work to do :
- Calculate the unit margin for a kilo of farm-raised pork.
- What is the overall margin on this total sale of farm pork?
- Determine the margin rate for the sale of farm-raised pork.
- Also determine the markup rate for this sale.
- Suggest strategic avenues to improve unit margin without affecting customer satisfaction.
Proposed correction:
The unit margin is obtained by the formula:
Unit margin = PV excluding tax – PA excluding tax
Unit margin = €28 – €15 = €13
The unit margin on a kilo of farm pork is €13.The overall margin is calculated by multiplying the unit margin by the quantity sold:
Overall margin = Unit margin x Quantity sold
Overall margin = €13 x 200 kg = €2
The Butcher's Shop achieved an overall margin of €2.The margin rate is calculated as follows:
Margin rate = ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100
Margin rate = ((€28 – €15) ÷ €15) x 100 = 86,67%
The margin rate on the sale of farm pork is therefore 86,67%.
The markup rate is given by the formula:
Brand rate = ((PV excluding tax – PA excluding tax) ÷ PV excluding tax) x 100
Brand rate = ((€28 – €15) ÷ €28) x 100 = 46,43%
The markup rate is 46,43%.Improving the unit margin could involve negotiations with suppliers to reduce the purchase cost, or by promoting a premium offer to increase the selling price while maintaining customer satisfaction.
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: Southern Artisanal Butchery
States :
The Boucherie Artisanale du Sud sells veal, a meat prized by its customers. You have the following information for the latest sale of veal:
- Purchase price excluding tax per kilo of veal: €26.
- Selling price excluding tax per kilo: €48.
- Quantity sold: 80 kg.
Work to do :
- Calculate the unit margin for each kilo of veal.
- Establish the overall margin obtained from the quantity sold.
- Determine the margin rate achieved by the butcher's shop.
- Calculate the markup rate for this transaction.
- What could be the strategy to reduce purchasing costs while preserving product quality?
Proposed correction:
The unit margin for a kilo of veal is calculated using the formula:
Unit margin = PV excluding tax – PA excluding tax
Unit margin = €48 – €26 = €22
The unit margin is €22.The overall margin is obtained by applying the following formula:
Overall margin = Unit margin x Quantity sold
Overall margin = €22 x 80 kg = €1
The Boucherie Artisanale du Sud achieved an overall margin of €1.The margin rate is given by the formula:
Margin rate = ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100
Margin rate = ((€48 – €26) ÷ €26) x 100 = 84,62%
The margin rate is therefore 84,62%.
For the mark rate:
Brand rate = ((PV excluding tax – PA excluding tax) ÷ PV excluding tax) x 100
Brand rate = ((€48 – €26) ÷ €48) x 100 = 45,83%
The mark rate achieved is 45,83%.To reduce purchasing costs without compromising on quality, it could be considered to place orders for larger volumes to obtain more attractive prices from suppliers. A long-term partnership could also help.
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: Essential Organic Butchery
States :
La Boucherie Bio Essentielle focuses on meats from organic farming. The butcher wants to obtain precise information on the margins made with the sale of duck.
- Purchase price excluding tax for a kilo of organic duck: €30.
- Selling price excluding tax for a kilo of organic duck: €55.
- Quantity sold: 60 kg.
Work to do :
- Determine the unit margin obtained for a kilo of organic duck.
- What is the overall margin made on the sale of 60 kilos of organic duck?
- Calculate the margin rate on the sale of organic duck.
- Also calculate the markup rate.
- Suggest a way to maintain the unit margin high without increasing the selling price.
Proposed correction:
The unit margin can be calculated by the following formula:
Unit margin = PV excluding tax – PA excluding tax
Unit margin = €55 – €30 = €25
The unit margin achieved is therefore €25 for each kilo of organic duck.For the overall margin:
Overall margin = Unit margin x Quantity sold
Overall margin = €25 x 60 kg = €1
The overall margin on the sale of organic duck is €1.The margin rate is calculated as follows:
Margin rate = ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100
Margin rate = ((€55 – €30) ÷ €30) x 100 = 83,33%
The margin rate is 83,33%.
The markup rate can be established by applying the following formula:
Brand rate = ((PV excluding tax – PA excluding tax) ÷ PV excluding tax) x 100
Brand rate = ((€55 – €30) ÷ €55) x 100 = 45,45%
The markup rate on the sale of organic duck is 45,45%.Maintaining a high unit margin without increasing price could be done by optimizing internal processes (reducing losses, better inventory management) or by offering complementary products that would boost overall sales.
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: Traditional Bordeaux Butchery
States :
The Boucherie Traditionnelle Bordelaise offers farm rabbit. The manager wants to know his current margins in order to re-evaluate prices if necessary. Here is the information you have:
- Purchase price excluding tax for a kilo of rabbit: €16.
- Selling price excluding tax per kilo: €29.
- Quantity sold: 110 kg.
Work to do :
- Calculate the unit margin made per kilo of rabbit sold.
- Establish the overall margin made on this sale.
- Calculate the margin rate achieved by the butcher's shop.
- Determine the markup rate for this sale.
- Discuss the implications of lower purchasing cost on overall margin.
Proposed correction:
The unit margin is calculated as follows:
Unit margin = PV excluding tax – PA excluding tax
Unit margin = €29 – €16 = €13
The unit margin achieved is €13.For the overall margin:
Overall margin = Unit margin x Quantity sold
Overall margin = €13 x 110 kg = €1
The Traditional Bordeaux Butcher's Shop achieves an overall margin of €1.The margin rate is usually calculated by:
Margin rate = ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100
Margin rate = ((€29 – €16) ÷ €16) x 100 = 81,25%
The margin rate achieved is 81,25%.
The markup rate is calculated by the following formula:
Brand rate = ((PV excluding tax – PA excluding tax) ÷ PV excluding tax) x 100
Markup rate = ((€29 – €16) ÷ €29) x 100 = 44,83%.
The markup rate on this sale is 44,83%.A reduction in the cost of purchase can greatly improve the overall margin while leaving other variables unchanged, or would allow attractive promotions to be offered without the butcher's shop losing 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: Mountain Butchery
States :
La Boucherie de la Montagne sells game. It is distinguished by the exceptional quality of its products. Here is the information for the last sale:
- Purchase price excluding tax for a kilo of wild boar: €35.
- Selling price excluding tax for a kilo of wild boar: €65.
- Quantity sold: 50 kg.
Work to do :
- Calculate the unit margin per kilo of wild boar sold.
- What overall margin does the butcher's shop make on the sale of wild boar?
- Calculate the margin rate for this sale.
- Calculate the markup rate on the sale of wild boar.
- Analyze the risks of this pricing strategy in a localized market.
Proposed correction:
The unit margin is given by the formula:
Unit margin = PV excluding tax – PA excluding tax
Unit margin = €65 – €35 = €30
The unit margin is €30.The overall margin is calculated as follows:
Overall margin = Unit margin x Quantity sold
Overall margin = €30 x 50 kg = €1
The Boucherie de la Montagne achieved an overall margin of €1.The margin rate is given by:
Margin rate = ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100
Margin rate = ((€65 – €35) ÷ €35) x 100 = 85,71%
The margin rate is 85,71%.
The markup rate is calculated as follows:
Brand rate = ((PV excluding tax – PA excluding tax) ÷ PV excluding tax) x 100
Brand rate = ((€65 – €35) ÷ €65) x 100 = 46,15%
The markup rate on this sale is 46,15%.A high selling price provides a comfortable margin, but in a localized market it is essential to monitor demand. Prices that are too high could discourage part of the local clientele.
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: Butchery of Provençal Flavors
States :
The Boucherie des Saveurs Provençales sells grass-fed sheep, a product specific to the region. The following data is provided for the latest sales:
- Purchase price excluding tax for a kilo of mutton: €27.
- Selling price excluding tax per kilo: €50.
- Quantity sold: 90 kg.
Work to do :
- Calculate the unit margin for a kilo of grass-fed sheep.
- Establish the overall margin generated by the sale of 90 kg of mutton.
- Calculate the margin rate made on this sale.
- Determine the markup rate achieved.
- Consider a strategy to retain customers while consolidating current margin.
Proposed correction:
The unit margin is calculated using the formula:
Unit margin = PV excluding tax – PA excluding tax
Unit margin = €50 – €27 = €23
The unit margin on the sheep is €23.For the overall margin:
Overall margin = Unit margin x Quantity sold
Overall margin = €23 x 90 kg = €2
The overall margin made from the sale of sheep is €2.The margin rate is given by the following formula:
Margin rate = ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100
Margin rate = ((€50 – €27) ÷ €27) x 100 = 85,19%
The margin rate is therefore 85,19%.
The markup rate is calculated as follows:
Brand rate = ((PV excluding tax – PA excluding tax) ÷ PV excluding tax) x 100
Brand rate = ((€50 – €27) ÷ €50) x 100 = 46%
The mark rate achieved is 46%.To maintain customer loyalty, while preserving the margin, marketing actions (loyalty cards, seasonal promotions) can be considered, without impacting the unit margin.
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: Traditional and Prestige Butchery
States :
The Boucherie Tradition et Prestige sells fine cuts of beef for gourmet customers. The butcher would like to know his exact margins on his latest sale of beef fillet.
- Purchase price excluding tax for a kilo of beef fillet: €40.
- Selling price excluding tax per kilo: €75.
- Quantity sold: 70 kg.
Work to do :
- Calculate the unit margin for a kilo of beef fillet.
- What is the overall margin achieved?
- Determine the margin rate on this sale.
- What is the markup rate associated with this sale?
- What recommendations would you make to improve profitability without impacting sales?
Proposed correction:
The unit margin for a kilo of beef fillet is:
Unit margin = PV excluding tax – PA excluding tax
Unit margin = €75 – €40 = €35
The unit margin is €35.The overall margin is obtained by multiplying the unit margin by the quantity sold:
Overall margin = Unit margin x Quantity sold
Overall margin = €35 x 70 kg = €2
The Boucherie Tradition et Prestige achieved an overall margin of €2.The margin rate is calculated as follows:
Margin rate = ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100
Margin rate = ((€75 – €40) ÷ €40) x 100 = 87,5%
The margin rate is therefore 87,5%.
The markup rate is given by the formula:
Brand rate = ((PV excluding tax – PA excluding tax) ÷ PV excluding tax) x 100
Brand rate = ((€75 – €40) ÷ €75) x 100 = 46,67%
The markup rate is 46,67%.To improve profitability, it might be helpful to maintain a high price for high-end customers while reducing costs through agreements with suppliers to obtain volume discounts.
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 |