Summary
Application: At BioGourmet
States :
At BioGourmet, a brand specializing in organic products, you are responsible for analyzing the profitability of their flagship product, a homemade granola. The purchase price excluding tax of the granola from the supplier is €3,50 per kilo. BioGourmet resells it at €7,80 excluding tax per kilo. In the last quarter, they sold 1 kilos of granola.
Work to do :
- Calculate the unit margin for each kilo of granola sold.
- Determine the overall margin achieved over the last quarter.
- What is the margin rate on granola?
- Calculate the markup rate of this product.
- Consider the strategic impact of an increase in purchasing cost on brand rate.
Proposed correction:
-
The unit margin is calculated by subtracting the pre-tax purchase price from the pre-tax selling price.
€7,80 – €3,50 = €4,30
Each kilo of granola sold generates a margin of €4,30. -
The overall margin is the unit margin multiplied by the quantity sold.
€4,30 x 1 = €200
BioGourmet achieved an overall margin of €5 in the last quarter. -
The margin rate is calculated by ((PV HT – PA HT) ÷ PA HT) x 100.
((€7,80 – €3,50) ÷ €3,50) x 100 = 122,86%
The margin rate achieved is 122,86%.
-
The markup rate is calculated by ((PV HT – PA HT) ÷ PV HT) x 100.
((€7,80 – €3,50) ÷ €7,80) x 100 = 55,13%
The markup rate of granola is 55,13%. -
An increase in the purchase cost would reduce the difference between the selling price and the purchase price, thus decreasing the markup rate. Strategically, BioGourmet could revise its selling price or improve its supply to maintain its 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 |
Application: TechFuture
States :
TechFuture, an innovative technology startup, has just launched a new gadget. The selling price of this gadget is €120 excluding VAT, and the purchase price excluding VAT is €85. TechFuture has projected to sell 500 units this semester. In case of a fluctuation in sales of plus or minus 10%, the team must adjust its forecast.
Work to do :
- Calculate the unit margin obtained per gadget sold.
- Estimate the overall margin expected for this semester.
- What is the margin rate of this gadget?
- Calculate the markup rate for each gadget sale.
- Discuss the importance for TechFuture to anticipate market variations on their budget.
Proposed correction:
-
Unit margin = PV HT – PA HT.
€120 – €85 = €35
Each gadget sold generates a margin of €35. -
The overall margin is the unit margin multiplied by the projected sale.
35 € x 500 = 17 €
TechFuture forecasts an overall margin of €17 for this semester. -
The margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
((€120 – €85) ÷ €85) x 100 = 41,18%
The margin rate reaches 41,18%.
-
The mark rate = ((PV HT – PA HT) ÷ PV HT) x 100.
((€120 – €85) ÷ €120) x 100 = 29,17%
The gadget's markup rate is 29,17%. -
By anticipating market fluctuations, TechFuture can better manage its cash flow and adjust its marketing strategies to achieve its revenue when there are unexpected variations in 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: The Good Knitting
States :
Le Bon Tricot, a boutique specializing in hand-knitted woolen clothing, is planning to introduce a new sweater for the winter. The production cost of a sweater is €25 excluding tax, and it will be sold at €55 excluding tax. This season, they plan to sell 300 units. The manager wants to analyze the profitability and competitiveness of this figure.
Work to do :
- Determine the unit margin for each sweater sold.
- Calculate the overall margin expected for the season.
- What is the sweater margin rate?
- Enjoy the markup rate for the sweater.
- Analyze how Le Bon Tricot could improve its competitiveness in the market.
Proposed correction:
-
Unit margin = PV HT – PA HT.
€55 – €25 = €30
Each sweater sold generates a margin of €30. -
Overall margin = Unit margin x Quantity sold.
30 € x 300 = 9 €
For this season, the overall margin expected is €9. -
The margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
((€55 – €25) ÷ €25) x 100 = 120%
The sweater's margin rate is 120%.
-
The mark rate = ((PV HT – PA HT) ÷ PV HT) x 100.
((€55 – €25) ÷ €55) x 100 = 54,55%
The markup rate for the sweater is 54,55%. -
To improve its competitiveness, Le Bon Tricot could invest in better quality materials or diversify its products according to changing customer preferences, while maintaining competitive intelligence.
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: Ecotime
States :
Ecotime, an eco-friendly watch company, would like to analyze its financial performance for its latest model. The purchase cost excluding tax per watch is €60, and they will be sold at €150 excluding tax. The expected monthly production is 400 units to meet demand.
Work to do :
- Calculate the unit margin obtained per watch.
- Estimate the overall monthly margin.
- What percentage is the watch's margin rate?
- Calculate the markup rate of this watch model.
- Consider the impact on profits if the cost of production decreased by 10%.
Proposed correction:
-
Unit margin = PV HT – PA HT.
€150 – €60 = €90
Each watch sold allows a margin of €90. -
Overall margin = Unit margin x Monthly quantity produced.
90 € x 400 = 36 €
The overall monthly margin is estimated at €36. -
The margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
((€150 – €60) ÷ €60) x 100 = 150%
The margin rate is therefore 150%.
-
The mark rate = ((PV HT – PA HT) ÷ PV HT) x 100.
((€150 – €60) ÷ €150) x 100 = 60%
The markup rate of the watch is 60%. -
A 10% decrease in production cost would increase the unit margin, thus improving the profit per product, which could allow Ecotime to invest even more in innovation or reduce their selling price to capture a larger market share.
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: Locavore & You
States :
Locavore & Vous, a local produce grocery store, is getting ready to market a new strawberry jam. The cost price excluding tax for each jar is €2,20, and it will be sold at €4,50 excluding tax. The grocery store hopes to sell 700 jars per month.
Work to do :
- Calculate the unit margin per jar of jam sold.
- Explore the overall expected margin per month.
- Determine the margin rate of the jam.
- What is the mark rate?
- Discuss how the grocery store could increase its margins without changing suppliers.
Proposed correction:
-
Unit margin = PV HT – PA HT.
€4,50 – €2,20 = €2,30
Each pot generates a margin of €2,30. -
Overall margin = Unit margin x Quantity sold per month.
2,30 € x 700 = 1 €
The grocery store expects an overall margin of €1 each month. -
The margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
((€4,50 – €2,20) ÷ €2,20) x 100 = 104,55%
The margin rate of jam is 104,55%.
-
The mark rate = ((PV HT – PA HT) ÷ PV HT) x 100.
((€4,50 – €2,20) ÷ €4,50) x 100 = 51,11%
The markup rate is 51,11%. -
To increase its margins, the grocery store could review its production process to reduce costs, increase sales through an effective marketing campaign or expand its range to other flavors to attract more customers.
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: Fitness Zen
States :
Fitness Zen, a wellness center, sells quarterly memberships for €180 excluding VAT. Each membership costs the center €100 between infrastructure costs and staff supervision. The center has a target of 150 new memberships for this quarter.
Work to do :
- Calculate the unit margin per subscription.
- Estimate the total margin expected for the quarter.
- What is the margin rate on a subscription?
- Calculate the markup rate for the subscription.
- What effect could a 20% increase in subscriptions have on Fitness Zen's quarterly profits?
Proposed correction:
-
Unit margin = PV HT – PA HT.
€180 – €100 = €80
Each subscription sold contributes to a margin of €80. -
Overall margin = Unit margin x Number of subscriptions.
80 € x 150 = 12 €
For this quarter, the expected margin is €12. -
The margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
((€180 – €100) ÷ €100) x 100 = 80%
The margin rate on the subscription is 80%.
-
The mark rate = ((PV HT – PA HT) ÷ PV HT) x 100.
((€180 – €100) ÷ €180) x 100 = 44,44%
The markup rate for the subscription is 44,44%. -
A 20% increase in subscriptions, or 30 additional subscriptions, increases the margin by €2, giving a total quarterly margin of €400, contributing significantly to the financial strength of the centre.
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: Corner Cafe
States :
Le Café du Coin wants to evaluate the cost and profitability of its new homemade sandwiches. The production cost excluding VAT of a sandwich is €4, and they plan to sell it at €8,50 excluding VAT. Over the course of a week, the café hopes to sell 250 sandwiches.
Work to do :
- Determine the unit margin for a sandwich.
- Calculate the overall weekly margin.
- What is the margin rate for sandwiches?
- Enjoy the markup rate on every sandwich.
- Imagine a strategy for Café du Coin to optimize margins by increasing sales volume.
Proposed correction:
-
Unit margin = PV HT – PA HT.
€8,50 – €4 = €4,50
Each sandwich sold brings a margin of €4,50. -
Overall margin = Unit margin x Quantity sold.
4,50 € x 250 = 1 €
The overall margin expected per week is €1. -
The margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
((€8,50 – €4) ÷ €4) x 100 = 112,5%
The margin rate for sandwiches is 112,5%.
-
The mark rate = ((PV HT – PA HT) ÷ PV HT) x 100.
((€8,50 – €4) ÷ €8,50) x 100 = 52,94%
The markup rate for sandwiches is 52,94%. -
To optimize margins, Café du Coin could adopt promotions that attract more customers during off-peak hours, or work on a loyalty program that encourages regular purchases.
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: Art and Matter
States :
L'Art et la Matière, a contemporary art gallery, offers lithographs whose purchase cost is €200 excluding VAT each. They are sold at €450 excluding VAT. The gallery plans to sell at least 20 copies per month.
Work to do :
- Calculate the unit margin per lithograph sold.
- Estimate the expected monthly overall margin.
- What is the margin rate on each lithograph?
- Calculate the markup rate of these works.
- How could the gallery increase both sales and margins while remaining competitive?
Proposed correction:
-
Unit margin = PV HT – PA HT.
€450 – €200 = €250
Each lithograph sold generates a margin of €250. -
Overall margin = Unit margin x Quantity sold monthly.
250 € x 20 = 5 €
The expected monthly margin is €5. -
The margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
((€450 – €200) ÷ €200) x 100 = 125%
The margin rate for lithographs is 125%.
-
The mark rate = ((PV HT – PA HT) ÷ PV HT) x 100.
((€450 – €200) ÷ €450) x 100 = 55,56%
The markup rate on these coins is 55,56%. -
The gallery could organize exclusive events around launches to create buzz, adopt word-of-mouth promotion and develop partnerships with emerging artists to offer new creations at a lower cost while attracting collectors interested in this type of art.
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: StartSweat
States :
StartSweat, an online fitness company, offers an annual training program for €600 excluding VAT. The cost of the service, including the platform and use of coaches, is €320 excluding VAT per subscription. The company hopes to sell 250 subscriptions this year.
Work to do :
- Determine the unit margin made per subscription.
- Calculate the expected total annual margin.
- What is the margin rate on this program?
- Evaluate the markup rate of a subscription.
- How could the company reduce costs while increasing the quality of the service offered?
Proposed correction:
-
Unit margin = PV HT – PA HT.
€600 – €320 = €280
Each subscription generates a margin of €280. -
Overall margin = Unit margin x Quantity sold per year.
280 € x 250 = 70 €
The expected annual margin is €70. -
The margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
((€600 – €320) ÷ €320) x 100 = 87,5%
The margin rate on the program is 87,5%.
-
The mark rate = ((PV HT – PA HT) ÷ PV HT) x 100.
((€600 – €320) ÷ €600) x 100 = 46,67%
The markup rate for a subscription is 46,67%. -
StartSweat can invest in automation technologies to reduce delivery costs or offer standardized coaching instructions while increasing the perceived value of programs with additional high-value content.
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 |