Summary
Application: The Chocolate Workshop
States :
L'Atelier du Chocolat wants to optimize its pricing strategy for its organic chocolate bars. The company currently sells each bar at a sales price excluding tax (SRP HT) of €4 and wants to know how to adjust its prices to maximize its margins. The purchase price excluding tax (PP HT) of a bar is €2,50. You are responsible for reviewing current margins and proposing potential adjustments.
Work to do :
- Calculate the current unit margin for each chocolate bar.
- Determine the current margin rate of L'Atelier du Chocolat.
- Calculate the current markup rate for tablets sold.
- If L'Atelier du Chocolat decides to increase the PV excluding tax to €4,50, what would be the new markup rate?
- By analyzing the new results, propose a strategic recommendation to improve profitability.
Proposed correction:
-
The unit margin is calculated by subtracting the purchase price excluding tax (PA HT) from the sale price excluding tax (PV HT).
Unit margin = PV HT – PA HT = €4 – €2,50 = €1,50
Each tablet generates a unit margin of €1,50. -
The margin rate is determined by the formula: ((PV HT – PA HT) ÷ PA HT) x 100.
Margin rate = ((€4 – €2,50) ÷ €2,50) x 100 = (€1,50 ÷ €2,50) x 100 = 60%
The current margin rate is 60%. -
The markup rate is calculated using the formula: ((PV HT – PA HT) ÷ PV HT) x 100.
Markup rate = ((€4 – €2,50) ÷ €4) x 100 = (€1,50 ÷ €4) x 100 = 37,5%
The current markup rate is 37,5%.
-
For a PV excluding VAT of €4,50, the new markup rate is: ((PV excluding VAT – PA excluding VAT) ÷ PV excluding VAT) x 100.
New markup rate = ((€4,50 – €2,50) ÷ €4,50) x 100 = (€2,00 ÷ €4,50) x 100 = 44,44%
With a PV excluding tax of €4,50, the markup rate would increase to 44,44%. -
The increase from 37,5% to 44,44% markup shows an improvement in profitability. Increasing the price while maintaining quality and customer satisfaction could be beneficial for the company.
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 |
Application: Tech Innovators
States :
Tech Innovators, a startup specializing in smartphone accessories, wants to introduce a new range of premium cases. The production cost excluding taxes (record purchase excluding taxes) for each unit is €8, and they want to set the sales price excluding taxes (SRP excluding taxes) at €15. Your mission is to evaluate the potential profitability of this new product.
Work to do :
- Calculate the unit margin per hull.
- Determine the margin rate for this new product line.
- Evaluate the markup rate for cases sold at €15.
- Suppose the company wants to offer a promotion with a 10% discount on the PV HT, what will be the new PV HT?
- Discuss the financial implications of this promotion for Tech Innovators.
Proposed correction:
-
The unit margin is obtained by subtracting the production cost (purchase record excluding tax) from the sales price excluding tax (SVP HT).
Unit margin = PV excluding tax – production cost = €15 – €8 = €7
Each hull generates a unit margin of €7. -
The margin rate is calculated using the formula: ((PV HT – production cost) ÷ production cost) x 100.
Margin rate = ((€15 – €8) ÷ €8) x 100 = (€7 ÷ €8) x 100 = 87,5%
The margin rate for this range is 87,5%. -
The markup rate is given by: ((PV HT – production cost) ÷ PV HT) x 100.
Markup rate = ((€15 – €8) ÷ €15) x 100 = (€7 ÷ €15) x 100 = 46,67%
The markup rate is 46,67%.
-
To calculate the new PV HT with a 10% discount, we use the formula: PV HT x (1 – Discount).
New PV HT = €15 x (1 – 0,10) = €15 x 0,90 = €13,50
The new PV excluding tax after discount will be €13,50. -
Reducing the PV excluding VAT to €13,50 lowers the unit margin, but can boost sales and increase customer loyalty. This strategy could increase volumes sold and offset the reduction in margins.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | PV HT – Production cost |
| Margin rate | ((PV HT – Production cost) ÷ Production cost) x 100 |
| Brand taxes | ((PV HT – Production cost) ÷ PV HT) x 100 |
| New PV excluding VAT after discount | PV HT x (1 – Discount) |
Application: Ethical Clothing
States :
Habits Éthiques is a sustainable fashion company that manufactures organic cotton t-shirts. Each t-shirt costs €10 to produce (PA excluding VAT) and is sold for €25 (PV excluding VAT). The managers want to analyze their price positioning to better adjust to the market and increase their profits.
Work to do :
- Calculate the current unit margin of each t-shirt.
- Determine the current margin rate.
- Evaluate the current markup rate.
- If Habits Éthiques wishes to reduce its net profit by €2, what impact would this have on the unit margin?
- Analyze the strategic implications of such a reduction in production costs.
Proposed correction:
-
The unit margin is the difference between the PV HT and the PA HT.
Unit margin = PV HT – PA HT = €25 – €10 = €15
Each t-shirt generates a unit margin of €15. -
The margin rate is calculated via: ((PV HT – PA HT) ÷ PA HT) x 100.
Margin rate = ((€25 – €10) ÷ €10) x 100 = (€15 ÷ €10) x 100 = 150%
The current margin rate is 150%. -
The markup rate is determined by: ((PV HT – PA HT) ÷ PV HT) x 100.
Markup rate = ((€25 – €10) ÷ €25) x 100 = (€15 ÷ €25) x 100 = 60%
The markup rate is 60%.
-
If the PA excluding tax is reduced by €2, the new PA excluding tax becomes €8.
New unit margin = €25 – €8 = €17
The €2 reduction in the net PA increases the unit margin to €17 per t-shirt. -
Reducing the PA HT directly improves profitability without affecting the customer price, which could offer Habits Éthiques a competitive advantage and strengthen its market position.
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 |
| New unit margin | PV HT – New PA HT |
Application: Bistro Gourmand
States :
Le Bistro Gourmand, a renowned restaurant, wants to review its wine list to better optimize its margins. The purchase cost excluding tax (PA HT) of a bottle of wine is €12, and the menu indicates a sales price excluding tax (PV HT) of €30. The establishment is considering introducing a new pricing policy.
Work to do :
- Calculate the current unit margin for each bottle of wine.
- Determine the margin rate applied by Bistro Gourmand.
- Analyze the markup rate for the wine currently being sold.
- If the restaurant increases the PV HT by 10%, what will be the new PV HT and its impact on the markup rate?
- Recommend a strategy to increase sales without compromising margins.
Proposed correction:
-
The unit margin is the difference between the selling price (SVP excluding VAT) and the purchasing cost (PC excluding VAT).
Unit margin = PV HT – PA HT = €30 – €12 = €18
The unit margin is €18 per bottle. -
The margin rate is determined by the formula: ((PV HT – PA HT) ÷ PA HT) x 100.
Margin rate = ((€30 – €12) ÷ €12) x 100 = (€18 ÷ €12) x 100 = 150%
The margin rate is 150%. -
The markup rate is calculated using: ((PV HT – PA HT) ÷ PV HT) x 100.
Markup rate = ((€30 – €12) ÷ €30) x 100 = (€18 ÷ €30) x 100 = 60%
The current markup rate is 60%.
-
By increasing the PV HT by 10%, the new PV HT is €30 x 1,10 = €33.
New markup rate = ((€33 – €12) ÷ €33) x 100 = (€21 ÷ €33) x 100 = 63,64%
The new PV excluding tax will be €33, and the markup rate would increase to 63,64%. -
To boost sales, the strategy could include limited promotional offers and food and wine pairings, increasing footfall while maintaining a significant margin.
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 |
| New PV HT | PV HT x (1 + Increase) |
| New mark rate | ((New PV HT – PA HT) ÷ New PV HT) x 100 |
Application: GreenTech Solutions
States :
GreenTech Solutions, an innovative solar panel company, offers a product at a sales price excluding tax (PV HT) of €500 per unit, for a manufacturing cost excluding tax (PA HT) of €350. In a context of increased competition, it wishes to examine its pricing structure and explore price adjustments.
Work to do :
- Calculate the unit margin currently achieved by GreenTech Solutions.
- Find the current margin rate applied on the product.
- Evaluate what the current markup rate is for these solar panels.
- If GreenTech decides to offer a commercial discount of €50 on the PV excluding VAT, what is the new PV excluding VAT after discount?
- Based on the previous analysis, evaluate the opportunity for sales discount and competitiveness.
Proposed correction:
-
The unit margin is the difference between PV HT and PA HT.
Unit margin = €500 – €350 = €150
Each unit sold generates a unit margin of €150. -
The margin rate is given by the following formula: ((PV HT – PA HT) ÷ PA HT) x 100.
Margin rate = ((€500 – €350) ÷ €350) x 100 = (€150 ÷ €350) x 100 = 42,86%
The current margin rate is 42,86%. -
The markup rate is calculated as follows: ((PV HT – PA HT) ÷ PV HT) x 100.
Markup rate = ((€500 – €350) ÷ €500) x 100 = (€150 ÷ €500) x 100 = 30%
The markup rate is currently 30%.
-
A discount of €50 reduces the PV excluding tax to: €500 – €50 = €450.
The new PV excluding tax after the commercial discount is €450. -
Although the discount reduces unit margin, it can potentially boost sales and improve price perception, thereby increasing GreenTech's market share in a competitive market.
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 |
| New PV excluding VAT after discount | PV HT – Commercial discount |
Application: BioPure Cosmetics
States :
BioPure Cosmetics, a committed beauty brand, sells a skin cream at a sales price excluding tax (SRP HT) of €35. The purchase price from suppliers (PP HT) is €20 per tube. As part of its expansion strategy, the company wants to assess its margins and consider new pricing strategies.
Work to do :
- Calculate the unit margin currently generated by each tube sold.
- Find the current margin rate of BioPure cream.
- Determine the current markup rate applied to the product.
- If BioPure's goal is to achieve a markup rate of 40%, at what selling price excluding VAT should it sell the product?
- Provide an analysis of the potential implications of this price adjustment on customer perception and sales volumes.
Proposed correction:
-
The unit margin is equal to: PV HT – PA HT = €35 – €20 = €15.
Each tube sold generates a unit margin of €15. -
The margin rate is calculated by: ((PV HT – PA HT) ÷ PA HT) x 100.
Margin rate = ((€35 – €20) ÷ €20) x 100 = (€15 ÷ €20) x 100 = 75%
The margin rate at the moment is 75%. -
The mark rate is obtained by: ((PV HT – PA HT) ÷ PV HT) x 100.
Markup rate = ((€35 – €20) ÷ €35) x 100 = (€15 ÷ €35) x 100 = 42,86%
The current markup rate is 42,86%.
-
For a target markup rate of 40%, use the formula: PV HT = PA HT ÷ (1 – Markup Rate).
PV excluding tax = €20 ÷ (1 – 0,40) = €20 ÷ 0,60 = €33,33
BioPure must set the selling price excluding VAT at around €33,33 for a mark-up rate of 40%. -
Reducing the price could potentially increase customer awareness, increase sales volumes but must be weighed against the already established premium perception of the brand, requiring clear communication.
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 |
| PV HT for target mark rate | PA HT ÷ (1 – Target mark rate) |
Application: MobileMasters
States :
MobileMasters, a smartphone parts distributor, is offering a replacement screen at a retail price excluding tax (RPT) of €80. The supplier purchase price (SP) is €50 per screen. They want to analyze their margins to potentially adjust their price positioning.
Work to do :
- Calculate the unit margin currently achieved by MobileMasters.
- Determine the current margin rate of this replacement screen.
- Evaluate the current markup rate applied on the screen.
- If MobileMasters wants to lower the PV excluding tax to €75, what will the new markup rate be?
- Propose an analysis of the consequences of this tariff adjustment on margins and market competitiveness.
Proposed correction:
-
The unit margin is calculated by: PV HT – PA HT = €80 – €50 = €30.
Each screen sold generates a unit margin of €30. -
The margin rate is calculated using the formula: ((PV HT – PA HT) ÷ PA HT) x 100.
Margin rate = ((€80 – €50) ÷ €50) x 100 = (€30 ÷ €50) x 100 = 60%
The current margin rate is 60%. -
The markup rate uses the formula: ((PV HT – PA HT) ÷ PV HT) x 100.
Markup rate = ((€80 – €50) ÷ €80) x 100 = (€30 ÷ €80) x 100 = 37,5%
The markup rate is 37,5%.
-
With a reduced PV excluding tax of €75, the markup rate becomes: ((€75 – €50) ÷ €75) x 100 = (€25 ÷ €75) x 100 = 33,33%.
The markup rate increases to 33,33% with a price reduction. -
Lowering the price often improves price competitiveness, potentially increasing sales volumes. However, MobileMasters must be careful to maintain its profit margins at a sustainable level.
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 |
| New mark rate | ((New PV HT – PA HT) ÷ New PV HT) x 100 |
Application: Artisan Delights
States :
Artisan Délices, a bakery and pastry shop, sells éclairs for €3 each. The cost of ingredients and preparation comes to €1,20 per éclair (PA excluding VAT). The company seeks to optimize its profits by evaluating its current and potential margin simulations.
Work to do :
- Calculate the current unit margin for each éclair sold.
- Determine the current margin rate of Artisan Délices.
- Calculate the current markup rate for lightning.
- If the production cost decreases by €0,20, what will the new net profit be, and how will this impact the unit margin?
- Analyze the effects of cost reduction on pricing strategy and profitability.
Proposed correction:
-
The unit margin is given by: PV HT – PA HT = €3 – €1,20 = €1,80.
Each éclair generates a unit margin of €1,80. -
The margin rate is defined by: ((PV HT – PA HT) ÷ PA HT) x 100.
Margin rate = ((€3 – €1,20) ÷ €1,20) x 100 = (€1,80 ÷ €1,20) x 100 = 150%
The margin rate is 150%. -
The markup rate is calculated by: ((PV HT – PA HT) ÷ PV HT) x 100.
Markup rate = ((€3 – €1,20) ÷ €3) x 100 = (€1,80 ÷ €3) x 100 = 60%
The current markup rate is 60%.
-
With a cost reduction of €0,20, PA HT becomes €1 per éclair.
New unit margin = €3 – €1 = €2
The cost reduction increases the margin to €2 per éclair. -
Reducing production costs directly improves profitability, potentially allowing prices to be reduced to increase competitiveness, while preserving beneficial margins.
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 |
| New unit margin | PV HT – New PA HT |
Application: Futuristic Electronics
States :
Futuristic Electronics, which specializes in connected gadgets, sells voice assistants for €120 excluding tax (PV HT) per unit. The production cost is €80 excluding tax (PA HT). With rapid market growth, the company is considering reviewing its prices and optimizing its profitability.
Work to do :
- Calculate the unit margin currently observed at Futuristic Electronics.
- Find the margin rate currently achieved on voice assistants.
- Evaluate the current markup rate.
- If the company increases the PV HT by 15%, what will be the new PV HT and the new margin rate?
- Provide some thoughts on the potential impact of this price increase on consumer perception and market strategy.
Proposed correction:
-
The unit margin is obtained by: PV HT – PA HT = €120 – €80 = €40.
The current unit margin is €40 per unit. -
The margin rate is calculated by: ((PV HT – PA HT) ÷ PA HT) x 100.
Margin rate = ((€120 – €80) ÷ €80) x 100 = (€40 ÷ €80) x 100 = 50%
The current margin rate is 50%. -
The mark rate is given by: ((PV HT – PA HT) ÷ PV HT) x 100.
Markup rate = ((€120 – €80) ÷ €120) x 100 = (€40 ÷ €120) x 100 = 33,33%
The markup rate is 33,33%.
-
An increase in the PV HT of 15% gives: New PV HT = €120 x 1,15 = €138.
New margin rate = ((€138 – €80) ÷ €80) x 100 = (€58 ÷ €80) x 100 = 72,5%
The new PV excluding tax will be €138, and the margin rate will rise to 72,5%. -
Although price increases improve margins, they can change customers' perception of value, potentially influencing demand. A marketing strategy could mitigate these effects and emphasize the benefits of the product.
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 |
| New PV HT | PV HT x (1 + Increase in %) |
| New margin rate | ((New PV HT – PA HT) ÷ PA HT) x 100 |