How-to-calculate-a-weighted-margin

How to Calculate a Weighted Margin | 9 Exercises

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Application: Star Jewelry

States :

Bijoux d'Étoiles is a company specializing in the manufacture and sale of handcrafted jewelry. It offers two main collections of jewelry: the "Éclat Pétillant" collection and the "Charme Envoûtant" collection. The first sells its pieces at a unit sale price of €80 with a purchase cost of €50, while the second is sold at €120 with a purchase cost of €70. Last year, Bijoux d'Étoiles sold 3 pieces of the "Éclat Pétillant" collection and 000 pieces of "Charme Envoûtant". You will need to calculate and interpret different margins to understand the performance of these two ranges.

Work to do :

  1. Calculate the unit margin for the two collections “Éclat Pétillant” and “Charme Envoûtant”.
  2. What is the overall margin of Bijoux d'Étoiles for all sales of the two collections?
  3. Determine the margin rate for each of the collections.
  4. Evaluate the markup rate for each of the collections.
  5. Analyze the profitability of the two collections and discuss the implications for Bijoux d'Étoiles' marketing strategy.

Proposed correction:

  1. To calculate the unit margin, we use the formula: Unit margin = PV HT – PA HT.

    • “Sparkling Sparkle”: €80 – €50 = €30.
    • “Bewitching Charm”: €120 – €70 = €50.

    The unit margin for “Éclat Pétillant” is €30 and for “Charme Envoûtant” it is €50.

  2. For overall margin, use: Overall Margin = Unit Margin x Quantity Sold.

    • “Sparkling Sparkle”: €30 x €3 = €000.
    • “Bewitching Charm”: €50 x €2 = €000.

    The overall margin for all sales of the two collections is €190.

  3. The margin rate is calculated as follows: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.

  • “Sparkling Sparkle”: ((€80 – €50) ÷ €50) x 100 = 60%.
  • “Bewitching Charm”: ((€120 – €70) ÷ €70) x 100 = 71,43%.

The margin rates are 60% for “Éclat Pétillant” and 71,43% for “Charme Envoûtant”.

  1. The markup rate is determined by: Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100.

    • “Sparkling Sparkle”: ((€80 – €50) ÷ €80) x 100 = 37,5%.
    • “Bewitching Charm”: ((€120 – €70) ÷ €120) x 100 = 41,67%.

    The mark rates are 37,5% and 41,67% respectively.

  2. Comparing the results, “Charme Envoûtant” has higher margin and brand rates than “Éclat Pétillant”, making it a more profitable product. Bijoux d'Étoiles could consider allocating more marketing resources to the “Charme Envoûtant” collection to maximize profitability thanks to its superior performance.

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: Technogadget

States :

Technogadget, an innovative start-up, specializes in new generation electronic gadgets. It distributes two flagship products: the "SmartDevice" with a sales price excluding VAT of €250 and a purchase cost of €150, and the "WaveSound" with a sales price excluding VAT of €180 and a purchase cost of €100. Over the past year, 1 units of "SmartDevice" and 500 units of "WaveSound" have been sold. You are responsible for calculating margins to measure product performance and recommending strategic actions.

Work to do :

  1. Establish the unit margin for each product.
  2. Calculate the overall margin obtained from the sale of the two products.
  3. Find the margin rate for “SmartDevice” and “WaveSound”.
  4. Identify the markup rate for each of the products.
  5. Discuss the results and propose recommendations to improve business performance.

Proposed correction:

  1. For the unit margin, we have: Unit margin = PV HT – PA HT.

    • “SmartDevice”: €250 – €150 = €100.
    • “WaveSound”: €180 – €100 = €80.

    The unit margin for “SmartDevice” is €100 and for “WaveSound” it is €80.

  2. Use the formula: Overall Margin = Unit Margin x Quantity Sold.

    • “SmartDevice”: €100 x 1 = €500.
    • “WaveSound”: €80 x €3 = €000.

    The overall margin for both products amounts to €390.

  3. The margin rate is calculated as follows: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.

  • “SmartDevice”: ((€250 – €150) ÷ €150) x 100 = 66,67%.
  • “WaveSound”: ((€180 – €100) ÷ €100) x 100 = 80%.

The margin rates are 66,67% for “SmartDevice” and 80% for “WaveSound”.

  1. The calculation of the markup rate is as follows: Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100.

    • “SmartDevice”: ((€250 – €150) ÷ €250) x 100 = 40%.
    • “WaveSound”: ((€180 – €100) ÷ €180) x 100 = 44,44%.

    The respective markup rates are 40% and 44,44%.

  2. Although 'WaveSound' has a slightly higher margin and brand ratio, 'SmartDevice' also generates a good unit margin. Technogadget may consider maintaining its current strategy while exploring expansion opportunities for 'WaveSound' and strengthening innovation for 'SmartDevice'.

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: Ethical Fashion

States :

Mode Éthique is a company committed to the production of eco-responsible clothing. It sells its items under two ranges: “Urban Chic” and “Nature Touch” clothing. “Urban Chic” items are sold at €90 per unit with a purchase cost of €60, while “Nature Touch” is offered at €110 for a purchase cost of €70. Over the year, the company sold 4 “Urban Chic” items and 000 “Nature Touch” items. Your mission is to calculate the corresponding margins and analyze their impact.

Work to do :

  1. Deduct the unit margin of the “Urban Chic” and “Nature Touch” collections.
  2. Determine the resulting overall margin of the two collections.
  3. Calculate the margin rate for each collection.
  4. Analyze the markup rate of the ranges offered.
  5. Suggest marketing strategies based on margin comparison.

Proposed correction:

  1. The formula for unit margin is: Unit margin = PV HT – PA HT.

    • “Urban Chic”: €90 – €60 = €30.
    • “Nature Touch”: €110 – €70 = €40.

    The unit margin is €30 for “Urban Chic” and €40 for “Nature Touch”.

  2. For the overall margin, apply: Overall margin = Unit margin x Quantity sold.

    • “Urban Chic”: €30 x €4 = €000.
    • “Nature Touch”: €40 x €1 = €800.

    The total overall margin of the two collections is €192.

  3. The margin rate is calculated by: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.

  • “Urban Chic”: ((€90 – €60) ÷ €60) x 100 = 50%.
  • “Nature Touch”: ((€110 – €70) ÷ €70) x 100 = 57,14%.

The respective margin rates are 50% for “Urban Chic” and 57,14% for “Nature Touch”.

  1. For the markup rate, use: Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100.

    • “Urban Chic”: ((€90 – €60) ÷ €90) x 100 = 33,33%.
    • “Nature Touch”: ((€110 – €70) ÷ €110) x 100 = 36,36%.

    The brand rates are 33,33% for “Urban Chic” and 36,36% for “Nature Touch”.

  2. The results indicate better profitability for “Nature Touch”. Mode Éthique could strengthen its communication on “Nature Touch”, capitalize on its eco-responsible appeal and encourage its network development to maximize 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: GreenTech Solutions

States :

GreenTech Solutions, a company specializing in sustainable energy solutions, offers two main products: the "EcoPanel", which is sold for €300 with a purchase cost of €180, and the "SolarGenerator", which is sold for €500 with a purchase cost of €350. These products have respectively recorded sales of 500 units and 200 units last year. Your mission is to explore the profitability of these products by calculating margins and proposing improvements.

Work to do :

  1. Identify the unit margin for the products “EcoPanel” and “SolarGenerator”.
  2. Calculate the overall margin of GreenTech Solutions' total sales.
  3. Evaluate the margin rate of each product.
  4. Determine the markup rate associated with each product.
  5. Analyze the results and recommend an action plan to strengthen GreenTech Solutions' performance.

Proposed correction:

  1. The unit mark is determined by: Unit margin = PV HT – PA HT.

    • “EcoPanel”: €300 – €180 = €120.
    • “SolarGenerator”: €500 – €350 = €150.

    The unit margins are €120 for “EcoPanel” and €150 for “SolarGenerator”.

  2. For overall margin, use: Overall Margin = Unit Margin x Quantity Sold.

    • “EcoPanel”: €120 x 500 = €60.
    • “SolarGenerator”: €150 x 200 = €30.

    The overall margin of the two products is €90.

  3. The margin rate is calculated by: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.

  • “EcoPanel”: ((€300 – €180) ÷ €180) x 100 = 66,67%.
  • “SolarGenerator”: ((€500 – €350) ÷ €350) x 100 = 42,86%.

The margin rates are found to be 66,67% for “EcoPanel” and 42,86% for “SolarGenerator”.

  1. For the markup rate, use: Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100.

    • “EcoPanel”: ((€300 – €180) ÷ €300) x 100 = 40%.
    • “SolarGenerator”: ((€500 – €350) ÷ €500) x 100 = 30%.

    The markup rates are 40% for “EcoPanel” and 30% for “SolarGenerator” respectively.

  2. “EcoPanel” has better profitability with higher margin and brand rates than “SolarGenerator”. GreenTech Solutions could consider further boosting the diffusion of “EcoPanel” and reviewing the costs or pricing strategy of “SolarGenerator” to improve its competitiveness.

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: Artisan Delights

States :

Artisan Délices is a fine pastry company that sells two types of products: “Célestes” cakes sold at a price of €20 with a purchase cost of €10, and “Exquises” tarts at a price of €30 with a purchase cost of €18. Over the past year, it has sold 2 “Célestes” and 500 “Exquises”. In addition to satisfying its customers’ taste buds, the company now wants to analyze the profitability of its products through margins.

Work to do :

  1. Calculate the unit margin for the products “Celestial” and “Exquisite”.
  2. What does this represent in terms of overall margin?
  3. Establish the margin rate for each product.
  4. Analyze the markup rate of these products.
  5. In light of this data, what strategies should Artisan Délices adopt to improve its margins?

Proposed correction:

  1. Unit margin: Unit margin = PV HT – PA HT.

    • “Celestial”: €20 – €10 = €10.
    • “Exquisite”: €30 – €18 = €12.

    The unit margins are €10 for “Célestes” and €12 for “Exquises”.

  2. Corresponding overall margin: Overall margin = Unit margin x Quantity sold.

    • “Celestial”: €10 x 2 = €500.
    • “Exquisite”: €12 x €1 = €200.

    The overall margin for both types of products is €39.

  3. The margin rate is established as follows: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.

  • “Celestial”: ((€20 – €10) ÷ €10) x 100 = 100%.
  • “Exquisite”: ((€30 – €18) ÷ €18) x 100 = 66,67%.

The margin rates are 100% for “Célestes” and 66,67% for “Exquises”.

  1. The markup rate is calculated as follows: Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100.

    • “Celestial”: ((€20 – €10) ÷ €20) x 100 = 50%.
    • “Exquisite”: ((€30 – €18) ÷ €30) x 100 = 40%.

    The markup rates are 50% for “Célestes” and 40% for “Exquises”.

  2. “Célestes” demonstrates superior profitability with a particularly high margin rate. Artisan Délices could take advantage of this performance by increasing its production or diversifying the range of “Célestes” to expand its sales volume.

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: EcoMobility

States :

EcoMobility is a company specializing in sustainable transportation equipment. It markets two electric bicycles: the "GreenCycle", sold at €1 with a purchase cost of €200, and the "BlueRider", priced at €800 with a purchase cost of €1. During the last year, 600 "GreenCycle" and 1 "BlueRider" were sold. Analyzing the profitability of these products could guide the company's future business strategies.

Work to do :

  1. Find the unit margin for each bike.
  2. Calculate the overall margin achieved by EcoMobility.
  3. Evaluate the margin rate of each product.
  4. Deduct the corresponding markup rate.
  5. What business strategy do you suggest based on these analyses?

Proposed correction:

  1. Unit margin: Unit margin = PV HT – PA HT.

    • “GreenCycle”: €1 – €200 = €800.
    • “BlueRider”: €1 – €600 = €1.

    The unit margins are €400 for “GreenCycle” and €500 for “BlueRider”.

  2. Overall margin: Overall margin = Unit margin x Quantity sold.

    • “GreenCycle”: €400 x 300 = €120.
    • “BlueRider”: €500 x 150 = €75.

    The overall margin for both models is €195.

  3. Margin rate: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.

  • “GreenCycle”: ((€1 – €200) ÷ €800) x 800 = 100%.
  • “BlueRider”: ((€1 – €600) ÷ €1) x 100 = 1%.

The margin rates are 50% and 45,45% respectively.

  1. Markup rate: Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100.

    • “GreenCycle”: ((€1 – €200) ÷ €800) x 1 = 200%.
    • “BlueRider”: ((€1 – €600) ÷ €1) x 100 = 1%.

    The brand rates stand at 33,33% for “GreenCycle” and 31,25% for “BlueRider”.

  2. “GreenCycle”, with a higher margin rate and sales volume, appears more profitable. EcoMobility could redirect its marketing resources to promote “GreenCycle” a little more, while seeking to optimize the costs of “BlueRider” to increase its 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: HighTech Innovators

States :

HighTech Innovators is a company offering cutting-edge technological solutions. It markets two of its inventions: the "SmartHome" at a price of €700 with a production cost of €500, and the "VirtualAssistant" at €400 with a production cost of €250. Last year, sales were recorded at 800 units for "SmartHome" and 1 for "VirtualAssistant". Your objective is to establish the margins on these products to guide the company's strategic decisions.

Work to do :

  1. Determine the unit margin for the two innovations.
  2. Calculate the overall margin for these sales.
  3. Find the margin rate for each product.
  4. Evaluate each person's markup rate.
  5. Based on the results obtained, what should be the next strategic step for HighTech Innovators?

Proposed correction:

  1. Unit margin: Unit margin = PV HT – PA HT.

    • “SmartHome”: €700 – €500 = €200.
    • “VirtualAssistant”: €400 – €250 = €150.

    The unit margins are respectively €200 for “SmartHome” and €150 for “VirtualAssistant”.

  2. Overall margin: Overall margin = Unit margin x Quantity sold.

    • “SmartHome”: €200 x 800 = €160.
    • “VirtualAssistant”: €150 x 1 = €000.

    The combined overall margin for both products is €310.

  3. Margin rate: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.

  • “SmartHome”: ((€700 – €500) ÷ €500) x 100 = 40%.
  • “VirtualAssistant”: ((€400 – €250) ÷ €250) x 100 = 60%.

The margin rates are 40% for “SmartHome” and 60% for “VirtualAssistant”.

  1. Markup rate: Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100.

    • “SmartHome”: ((€700 – €500) ÷ €700) x 100 = 28,57%.
    • “VirtualAssistant”: ((€400 – €250) ÷ €400) x 100 = 37,5%.

    The brand rates stand at 28,57% for “SmartHome” and 37,5% for “VirtualAssistant”.

  2. “VirtualAssistant” provides a higher margin and brand ratio, indicating strong profitability. HighTech Innovators could prioritize the development of this product by increasing options or diversifying distribution channels to increase financial impact.

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 Select

States :

Gourmet Select is a brand of premium frozen meals. The two flagship products are the “Oriental Flavor” sold at €12 and costing €7, and the “Mediterranean Cuisine” sold at €15 for a cost of €9. Over the past year, 5 units of “Oriental Flavor” and 000 of “Mediterranean Cuisine” have been sold. It is time to calculate the profitability to consider the next steps in the development of Gourmet Select.

Work to do :

  1. Calculate the unit margin for each gastronomic option.
  2. Determine the overall margin generated by these sales.
  3. Analyze the margin rate for each product.
  4. Calculate the markup rate for both products.
  5. Evaluate the results to define Gourmet Select’s development strategy.

Proposed correction:

  1. Unit margin: Unit margin = PV HT – PA HT.

    • “Oriental Flavor”: €12 – €7 = €5.
    • “Mediterranean Cuisine”: €15 – €9 = €6.

    The unit margins are €5 for “Oriental Flavor” and €6 for “Mediterranean Cuisine”.

  2. Overall margin: Overall margin = Unit margin x Quantity sold.

    • “Oriental Flavor”: €5 x €5 = €000.
    • “Mediterranean Cuisine”: €6 x €3 = €200.

    The overall margin generated is €44.

  3. Margin rate: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.

  • “Oriental Flavor”: ((€12 – €7) ÷ €7) x 100 = 71,43%.
  • “Mediterranean Cuisine”: ((€15 – €9) ÷ €9) x 100 = 66,67%.

The margin rates are 71,43% and 66,67% respectively.

  1. Markup rate: Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100.

    • “Oriental Flavor”: ((€12 – €7) ÷ €12) x 100 = 41,67%.
    • “Mediterranean Cuisine”: ((€15 – €9) ÷ €15) x 100 = 40%.

    The brand rates are 41,67% for “Oriental Flavor” and 40% for “Mediterranean Cuisine”.

  2. “Oriental Flavor” has a more favorable margin rate while brand rates are close. Gourmet Select could focus its efforts on “Oriental Flavor”, benefit from targeted marketing campaigns, and examine possibilities for improving margins on “Mediterranean Cuisine”.

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: Sport Dynamic Accessories

States :

Sport Dynamic Accessories offers high-end sports equipment, including the “RunnerPro” which sells for €60 for a purchase cost of €35, and the “FitBalance” which sells for €80 for a purchase cost of €50. Annual sales have reached 6 units for the “RunnerPro” and 000 for the “FitBalance”. Calculating the associated margins can help adjust strategic priorities.

Work to do :

  1. Calculate the unit margin for each sports equipment.
  2. What is the overall margin generated by sales?
  3. Identify the margin rate for both products.
  4. Determine the markup rate for each.
  5. What do these analyses suggest for Sport Dynamic Accessories’ strategy?

Proposed correction:

  1. Unit margin: Unit margin = PV HT – PA HT.

    • “RunnerPro”: €60 – €35 = €25.
    • “FitBalance”: €80 – €50 = €30.

    The unit margins are €25 for “RunnerPro” and €30 for “FitBalance”.

  2. Overall margin: Overall margin = Unit margin x Quantity sold.

    • “RunnerPro”: €25 x €6 = €000.
    • “FitBalance”: €30 x 2 = €500.

    The overall margin of the two products is €225.

  3. Margin rate: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.

  • “RunnerPro”: ((€60 – €35) ÷ €35) x 100 = 71,43%.
  • “FitBalance”: ((€80 – €50) ÷ €50) x 100 = 60%.

The margin rates are 71,43% for “RunnerPro” and 60% for “FitBalance”.

  1. Markup rate: Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100.

    • “RunnerPro”: ((€60 – €35) ÷ €60) x 100 = 41,67%.
    • “FitBalance”: ((€80 – €50) ÷ €80) x 100 = 37,5%.

    The markup rates are 41,67% for “RunnerPro” and 37,5% for “FitBalance”.

  2. “RunnerPro” has a higher margin and brand ratio, which supports the idea of ​​prioritizing its production and marketing. Sport Dynamic Accessories could optimize costs or seek product diversification to increase “FitBalance” margins.

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

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