In this section:
Application: Local Delicacies
States :
The company "Les Gourmandises du Terroir" specializes in the online sale of regional gourmet products. It wants to analyze the sales price and profitability of its new gourmet basket. The purchase price excluding tax of a basket is €30. The objective is to determine different financial elements to optimize the sales price policy by taking into account margin and brand rates.
Work to do :
- Calculate the selling price excluding VAT if the company wishes to apply a margin rate of 40%.
- Determine the sales price including tax, taking into account the VAT rate of 20%.
- Approximately how many baskets must be sold to achieve a gross margin of €3?
- Calculate the corresponding markup rate if the selling price excluding tax is €50.
- Analyze the strategic implications of the calculated results on product competitiveness.
Proposed correction:
-
To determine the selling price excluding tax with a margin rate of 40%, we use the formula:
[PV HT = PA HT x (1 + Margin rate)]By replacing, we get:
[PV excluding tax = €30 x (1 + 0,40) = €42]The selling price excluding tax for a basket must be €42.
-
The sales price including tax is calculated as follows:
[PV TTC = PV HT x (1 + VAT rate)]By replacing, we have:
[PV including tax = €42 x 1,20 = €50,40]The selling price including tax for the basket will be €50,40.
-
To achieve a gross margin of €3, you need to calculate the number of baskets to sell:
[Unit margin = PV HT – PA HT = €42 – €30 = €12]
[Number of baskets = Overall margin ÷ Unit margin]
[Number of baskets = €3 ÷ €600 = 12]
It will be necessary to sell 300 baskets to reach a gross margin of €3.
-
To calculate the markup rate if the PV excluding tax is €50, we use:
[Market rate = ((PV HT – PA HT) ÷ PV HT) x 100]By replacing, we get:
[Markup rate = ((€50 – €30) ÷ €50) x 100 = 40%]The markup rate is therefore 40%.
-
Analysis of the calculations shows that Gourmandises du Terroir have a comfortable margin both in terms of margin rate and brand, which can allow them to be competitive on the market.
Formulas Used:
| Title | Formulas |
|---|---|
| Selling Price excluding VAT with Margin Rate | PV excluding tax = PA excluding tax x (1 + Margin rate) |
| Sales price including tax | PV including VAT = PV excluding VAT x (1 + VAT rate) |
| Unit Margin | Unit margin = PV excluding tax – PA excluding tax |
| Number of Baskets for Global Margin | Number of baskets = Overall margin ÷ Unit margin |
| Brand taxes | Brand rate = ((PV excluding tax – PA excluding tax) ÷ PV excluding tax) x 100 |
Application: Tech&Co Solutions
States :
Tech&Co Solutions is an upcoming company on the high-tech accessories market. It has just launched a new model of audio headset. The purchase cost per headset is €60 excluding VAT. Tech&Co wants to set a sales price that ensures optimal profitability while remaining competitive.
Work to do :
- Determine the selling price excluding tax that would allow you to obtain a margin rate of 50%.
- What would be the sales price including tax, taking into account 20% VAT?
- If the company wants to make a total margin of €5, how many helmets should it sell?
- Calculate the markup rate if the selling price excluding tax is set at €100.
- Consider the strategic issues for Tech&Co Solutions of such a pricing policy.
Proposed correction:
-
To calculate the selling price excluding tax with a margin rate of 50%, we use:
[PV HT = PA HT x (1 + Margin rate)]By replacing:
[PV excluding tax = €60 x (1 + 0,50) = €90]The selling price excluding tax would be €90.
-
The calculation of the sales price including tax is done as follows:
[PV TTC = PV HT x (1 + VAT rate)]So :
[PV including tax = €90 x 1,20 = €108]The sales price including VAT is €108.
-
To reach a total margin of €5, you need to:
[Unit margin = PV HT – PA HT = €90 – €60 = €30]
[Number of helmets = Total margin ÷ Unit margin]
[Number of helmets = €5 ÷ €000 = €30]
Rounding up, approximately 167 helmets need to be sold to reach the €5 margin.
-
If the selling price excluding tax is €100, then:
[Market rate = ((PV HT – PA HT) ÷ PV HT) x 100][Markup rate = ((€100 – €60) ÷ €100) x 100 = 40%]
The markup rate would be 40%.
-
By applying a margin rate of 50%, Tech&Co Solutions can generate a significant margin while setting a price that remains relatively competitive in the technology sector.
Formulas Used:
| Title | Formulas |
|---|---|
| Selling Price excluding VAT with Margin Rate | PV excluding tax = PA excluding tax x (1 + Margin rate) |
| Sales price including tax | PV including VAT = PV excluding VAT x (1 + VAT rate) |
| Unit Margin | Unit margin = PV excluding tax – PA excluding tax |
| Number of Helmets for Total Margin | Number of helmets = Total margin ÷ Unit margin |
| Brand taxes | Brand rate = ((PV excluding tax – PA excluding tax) ÷ PV excluding tax) x 100 |
Application: Chic Beauty
States :
Beauté Chic is a renowned distributor of luxury cosmetic products. For its new perfume, the company has set a purchase cost of €45 excluding VAT and wants to develop a dynamic pricing strategy to establish itself on the market while maintaining attractive margins.
Work to do :
- Calculate the selling price excluding tax to achieve a margin rate of 65%.
- Determine the sales price including VAT of the perfume with a VAT rate of 20%.
- How many perfumes should Beauté Chic sell to achieve an overall margin of €6?
- Evaluate the markup rate if the selling price excluding tax of the perfume is €100.
- What are the strategic impacts of these pricing choices for Beauté Chic?
Proposed correction:
-
To determine the selling price excluding VAT:
[PV HT = PA HT x (1 + Margin rate)]By replacing:
[PV excluding tax = €45 x (1 + 0,65) = €74,25]The selling price of the perfume excluding VAT should be €74,25.
-
The calculation of the sales price including tax is:
[PV TTC = PV HT x (1 + VAT rate)]So :
[PV including tax = €74,25 x 1,20 = €89,10]The sales price including tax will be €89,10.
-
To achieve an overall margin of €6, we calculate:
[Unit margin = PV HT – PA HT = €74,25 – €45 = €29,25]
[Number of perfumes = Overall margin ÷ Unit margin]
[Number of perfumes = €6 ÷ €500 = €29,25]
Beauté Chic is expected to sell around 223 perfumes.
-
With a selling price excluding tax of €100, the markup rate is:
[Market rate = ((PV HT – PA HT) ÷ PV HT) x 100][Markup rate = ((€100 – €45) ÷ €100) x 100 = 55%]
The markup rate is 55%.
-
The analysis demonstrates that Beauté Chic can display high margin and brand rates, allowing it to consolidate its position in the market while maximizing its profitability.
Formulas Used:
| Title | Formulas |
|---|---|
| Selling Price excluding VAT with Margin Rate | PV excluding tax = PA excluding tax x (1 + Margin rate) |
| Sales price including tax | PV including VAT = PV excluding VAT x (1 + VAT rate) |
| Unit Margin | Unit margin = PV excluding tax – PA excluding tax |
| Number of Perfumes for Global Margin | Number of flavors = Overall margin ÷ Unit margin |
| Brand taxes | Brand rate = ((PV excluding tax – PA excluding tax) ÷ PV excluding tax) x 100 |
Application: Sportsissimo
States :
Sportsissimo is a successful sportswear store. It is looking to expand its range by introducing a new model of running shoes. The purchase cost per pair is €80 excluding VAT, and the company is working to optimize its pricing to improve sales while ensuring good profitability.
Work to do :
- Calculate the selling price excluding tax which would ensure a margin rate of 60%.
- Determine the sales price including tax of the shoes, considering a VAT rate of 20%.
- If Sportsissimo wants an overall margin of €10, how many pairs should it sell?
- Evaluate the markup rate if the selling price excluding tax is set at €130.
- Consider the strategic implications of these pricing options for the business.
Proposed correction:
-
To obtain the selling price excluding tax with a margin rate of 60%, adjust the formula:
[PV HT = PA HT x (1 + Margin rate)]By integrating the values:
[PV excluding tax = €80 x (1 + 0,60) = €128]The selling price excluding tax will be €128.
-
The sales price including tax is calculated as follows:
[PV TTC = PV HT x (1 + VAT rate)]By replacing:
[PV including tax = €128 x 1,20 = €153,60]The sales price including tax for the shoes is €153,60.
-
To achieve an overall margin of €10, calculate:
[Unit margin = PV HT – PA HT = €128 – €80 = €48]
[Number of pairs = Overall margin ÷ Unit margin]
[Number of pairs = €10 ÷ €000 = €48]
It will be necessary to sell approximately 209 pairs.
-
Assuming a net selling price of €130, the markup rate is:
[Market rate = ((PV HT – PA HT) ÷ PV HT) x 100][Markup rate = ((€130 – €80) ÷ €130) x 100 = 38,46%]
The markup rate is around 38,46%.
-
With these parameters, Sportsissimo can offer a product at a competitive price while ensuring sufficient margin to support its growth and future investments in the sports sector.
Formulas Used:
| Title | Formulas |
|---|---|
| Selling Price excluding VAT with Margin Rate | PV excluding tax = PA excluding tax x (1 + Margin rate) |
| Sales price including tax | PV including VAT = PV excluding VAT x (1 + VAT rate) |
| Unit Margin | Unit margin = PV excluding tax – PA excluding tax |
| Number of Pairs for Global Margin | Number of pairs = Overall margin ÷ Unit margin |
| Brand taxes | Brand rate = ((PV excluding tax – PA excluding tax) ÷ PV excluding tax) x 100 |
Application: Games and Toys
States :
Jeux et Jouets is a well-established retail chain looking to expand its offering with a new educational board game. The purchase cost per unit is €25 excluding VAT and the company wants to optimize its pricing strategy to remain competitive.
Work to do :
- Calculate the selling price excluding tax to achieve a margin rate of 70%.
- Determine the sales price including tax, taking into account a VAT rate of 20%.
- If Jeux et Jouets hopes to achieve an overall margin of €15, how many units must be sold?
- What would the markup rate be if the selling price excluding tax was set at €50?
- Discuss the potential strategic consequences of pricing choices for the company.
Proposed correction:
-
For the selling price excluding VAT with a margin rate of 70%:
[PV HT = PA HT x (1 + Margin rate)]By calculating:
[PV excluding tax = €25 x (1 + 0,70) = €42,50]The selling price excluding VAT must be €42,50.
-
Calculation for the sales price including tax:
[PV TTC = PV HT x (1 + VAT rate)]So :
[PV including tax = €42,50 x 1,20 = €51]The sales price including VAT is €51.
-
For a margin of €15, we calculate:
[Unit margin = PV HT – PA HT = €42,50 – €25 = €17,50]
[Number of units = Overall margin ÷ Unit margin]
[Number of units = €15 ÷ €000 = €17,50]
Approximately 858 units need to be sold to reach this goal.
-
For a PV excluding tax established at €50, the markup rate is:
[Market rate = ((PV HT – PA HT) ÷ PV HT) x 100][Markup rate = ((€50 – €25) ÷ €50) x 100 = 50%]
With a sale price of €50, the markup rate would be 50%.
-
Jeux et Jouets could consolidate its position in the educational games market by opting for strategic pricing that offers a good balance between competitiveness and profitability.
Formulas Used:
| Title | Formulas |
|---|---|
| Selling Price excluding VAT with Margin Rate | PV excluding tax = PA excluding tax x (1 + Margin rate) |
| Sales price including tax | PV including VAT = PV excluding VAT x (1 + VAT rate) |
| Unit Margin | Unit margin = PV excluding tax – PA excluding tax |
| Number of Units for Global Margin | Number of units = Overall margin ÷ Unit margin |
| Brand taxes | Brand rate = ((PV excluding tax – PA excluding tax) ÷ PV excluding tax) x 100 |
Application: FashionNow
States :
FashionNow is a rising brand in the ready-to-wear fashion sector, looking to attract attention with its new collections. The unit cost of a dress is set at €40 excluding VAT. The goal is to define a pricing strategy that guarantees solid margins while appealing to consumers.
Work to do :
- Calculate the selling price excluding tax corresponding to a margin rate of 55%.
- Determine the sales price including tax, considering a VAT rate of 20%.
- If FashionNow aims for a total margin of €8, how many dresses should it sell?
- What would the markup rate be if the dress was sold at a net selling price of €70?
- Discuss the strategic impacts for the brand and its reputation options with this strategy.
Proposed correction:
-
To set the selling price excluding tax with a margin rate of 55%:
[PV HT = PA HT x (1 + Margin rate)]By calculating:
[PV excluding tax = €40 x (1 + 0,55) = €62]The selling price excluding VAT should be €62.
-
Taking into account VAT, the sales price including VAT is:
[PV TTC = PV HT x (1 + VAT rate)]So :
[PV including tax = €62 x 1,20 = €74,40]The sales price including tax will be €74,40.
-
To reach a total margin of €8, you will need:
[Unit margin = PV HT – PA HT = €62 – €40 = €22]
[Number of dresses = Total margin ÷ Unit margin]
[Number of dresses = €8 ÷ €800 = 22]
FashionNow will have to sell 400 dresses.
-
If the selling price excluding tax is €70, the markup rate will be:
[Market rate = ((PV HT – PA HT) ÷ PV HT) x 100][Markup rate = ((€70 – €40) ÷ €70) x 100 = 42,86%]
The markup rate would be 42,86%.
-
With a well-defined pricing strategy, FashionNow can strengthen its reputation in the market, offering attractive products that also ensure good levels of profitability.
Formulas Used:
| Title | Formulas |
|---|---|
| Selling Price excluding VAT with Margin Rate | PV excluding tax = PA excluding tax x (1 + Margin rate) |
| Sales price including tax | PV including VAT = PV excluding VAT x (1 + VAT rate) |
| Unit Margin | Unit margin = PV excluding tax – PA excluding tax |
| Number of Dresses for Total Margin | Number of dresses = Total margin ÷ Unit margin |
| Brand taxes | Brand rate = ((PV excluding tax – PA excluding tax) ÷ PV excluding tax) x 100 |
Application: SantéConnect
States :
SantéConnect is an innovative company specializing in connected objects dedicated to health. With the launch of their new health tracker, the company plans to establish prices that maximize their profits and build customer loyalty. The purchase cost per tracker is €75 excluding VAT.
Work to do :
- Establish the selling price excluding tax for a margin rate of 35%.
- What would be the sales price including VAT of 20%?
- How many trackers does SantéConnect need to sell to reach an overall margin of €14?
- Calculate the markup rate if the selling price excluding tax is set at €110.
- Provide a strategic analysis on the implications of these prices for customer loyalty.
Proposed correction:
-
For a margin rate of 35%, the selling price excluding tax is calculated as follows:
[PV HT = PA HT x (1 + Margin rate)]By replacing:
[PV excluding tax = €75 x (1 + 0,35) = €101,25]The selling price excluding tax will be €101,25.
-
The sales price including tax will therefore be:
[PV TTC = PV HT x (1 + VAT rate)]By calculating:
[PV including tax = €101,25 x 1,20 = €121,50]The sales price including VAT is €121,50.
-
To reach the €14 margin, calculate:
[Unit margin = PV HT – PA HT = €101,25 – €75 = €26,25]
[Number of trackers = Overall margin ÷ Unit margin]
[Number of trackers = €14 ÷ €000 = 26,25]
Approximately 534 trackers are to be sold.
-
With a selling price excluding tax of €110, the markup rate becomes:
[Market rate = ((PV HT – PA HT) ÷ PV HT) x 100][Markup rate = ((€110 – €75) ÷ €110) x 100 = 31,82%]
The markup rate is 31,82%.
-
By choosing these prices, SantéConnect can offer an advantageous offer that builds customer loyalty through a perception of added value while optimizing their margins.
Formulas Used:
| Title | Formulas |
|---|---|
| Selling Price excluding VAT with Margin Rate | PV excluding tax = PA excluding tax x (1 + Margin rate) |
| Sales price including tax | PV including VAT = PV excluding VAT x (1 + VAT rate) |
| Unit Margin | Unit margin = PV excluding tax – PA excluding tax |
| Number of Trackers for Global Margin | Number of trackers = Overall margin ÷ Unit margin |
| Brand taxes | Brand rate = ((PV excluding tax – PA excluding tax) ÷ PV excluding tax) x 100 |
Application: SavourBio
States :
SavourezBio is an online delicatessen specializing in organic products. With a view to launching a new range of dried fruit baskets, the company wants to establish a pricing policy that optimizes its margins. The cost of purchasing a basket is €20 excluding VAT.
Work to do :
- Determine the selling price excluding tax to ensure a margin rate of 50%.
- Calculate the sales price including VAT by applying a VAT of 5,5%.
- How many baskets should SavourezBio sell for a total margin of €4?
- Evaluate the markup rate if the selling price excluding tax is set at €35.
- Analyze the strategic consequences of these pricing choices for the positioning of SavourezBio.
Proposed correction:
-
To establish the selling price excluding tax with a margin rate of 50%, use:
[PV HT = PA HT x (1 + Margin rate)]By calculating:
[PV excluding tax = €20 x (1 + 0,50) = €30]The selling price excluding tax will be €30.
-
The sales price including tax is defined as follows:
[PV TTC = PV HT x (1 + VAT rate)]So :
[PV including tax = €30 x 1,055 = €31,65]The sales price including VAT is €31,65.
-
For a total margin of €4, calculate:
[Unit margin = PV HT – PA HT = €30 – €20 = €10]
[Number of baskets = Overall margin ÷ Unit margin]
[Number of baskets = €4 ÷ €200 = 10]
SavourezBio will have to sell 420 baskets.
-
With a selling price excluding tax of €35, the markup rate is as follows:
[Market rate = ((PV HT – PA HT) ÷ PV HT) x 100][Markup rate = ((€35 – €20) ÷ €35) x 100 = 42,86%]
The markup rate is 42,86%.
-
By positioning its organic baskets at such a price, SavourezBio can strengthen its brand image while attracting customers looking for quality and making its products substantially profitable.
Formulas Used:
| Title | Formulas |
|---|---|
| Selling Price excluding VAT with Margin Rate | PV excluding tax = PA excluding tax x (1 + Margin rate) |
| Sales price including tax | PV including VAT = PV excluding VAT x (1 + VAT rate) |
| Unit Margin | Unit margin = PV excluding tax – PA excluding tax |
| Number of Baskets for Global Margin | Number of baskets = Overall margin ÷ Unit margin |
| Brand taxes | Brand rate = ((PV excluding tax – PA excluding tax) ÷ PV excluding tax) x 100 |
Application: EcoRide Bicycles
States :
EcoRide Bicycles is an innovative manufacturer of eco-friendly electric bicycles. Having recently developed a new urban model, the company aims for strategic positioning through its prices. The production cost per bicycle is €250 excluding VAT.
Work to do :
- Calculate the selling price excluding tax guaranteeing a margin rate of 45%.
- Determine the sales price including VAT with a VAT of 20%.
- How many bikes does EcoRide need to sell to reach a total margin of €25?
- What markup rate do you get if the bike is sold at a net selling price of €400?
- Discuss the strategic implications of this pricing policy for EcoRide in the bicycle market.
Proposed correction:
-
To calculate the target selling price excluding tax with a margin rate of 45%, use:
[PV HT = PA HT x (1 + Margin rate)]So :
[PV excluding tax = €250 x (1 + 0,45) = €362,50]The selling price excluding tax will be €362,50.
-
The calculation of the sales price including tax is as follows:
[PV TTC = PV HT x (1 + VAT rate)]By calculating:
[PV including tax = €362,50 x 1,20 = €435]The sales price including VAT is €435.
-
To reach a total margin of €25, calculate:
[Unit margin = PV HT – PA HT = €362,50 – €250 = €112,50]
[Number of bikes = Total margin ÷ Unit margin]
[Number of bikes = €25 ÷ €000 = €112,50]
Around 223 bicycles are to be sold.
-
With a selling price excluding tax of €400, the markup rate is:
[Market rate = ((PV HT – PA HT) ÷ PV HT) x 100][Markup rate = ((€400 – €250) ÷ €400) x 100 = 37,5%]
The markup rate is 37,5%.
-
By choosing a clear pricing policy, EcoRide Bicycles can position itself favorably on the electric bicycle market, attracting a clientele conscious of ecological values while ensuring its profitability.
Formulas Used:
| Title | Formulas |
|---|---|
| Selling Price excluding VAT with Margin Rate | PV excluding tax = PA excluding tax x (1 + Margin rate) |
| Sales price including tax | PV including VAT = PV excluding VAT x (1 + VAT rate) |
| Unit Margin | Unit margin = PV excluding tax – PA excluding tax |
| Number of Bikes for Total Margin | Number of bikes = Total margin ÷ Unit margin |
| Brand taxes | Brand rate = ((PV excluding tax – PA excluding tax) ÷ PV excluding tax) x 100 |