MKT100 - Metrics Mastery Worksheets
Worksheet: Metric 6 Pricing Wholesale to
1) You are a manufacturer of widgets that sells your products to a
wholesaler who in turn sells directly to retailers. You have
developed a new widget and you know that your competition’s
product retails for $23 in hardware stores. You know yours is
slightly better, and are pretty sure your product could sell for
$27. Assuming a retail margin of 33.3% and a wholesale margin
of 25%, what is the wholesaler’s selling price, and how much can
you sell the widgets to the wholesaler for?
2) As a small appliance manufacturer, your cost to manufacture and
package your coffee maker is $10/unit. You want this to be a
cash cow, so you decide to sell the coffee maker to your
wholesaler for $19/unit. You know that the wholesaler’s margin is
25%, and that retailers typically take 33.3% margins on small
appliances. What will your coffee maker retail for rounded to the
nearest whole number?
3) A bearing manufacturer buys raw materials for $0.50 per unit,
turns the raw materials into a roller bearing, and then sells the
bearings to a wholesaler for $1.00 per unit. The wholesaler then
sells the bearings to retailers for $2.00 per unit, and finally
consumers buy the bearings for $3.00 per unit. What is the per
unit margin in dollars for the manufacturer, wholesaler and
retailer? What is the percentage margin for the manufacturer,
wholesaler and retailer? What is the per unit margin in dollars
and percentage margin for the entire chain?
4) If the raw material cost goes up by $0.25 per unit for the bearing
manufacturer in question 3, what will be the retail price charged
to consumers if all members in the chain maintain the same
percent margin? What is the effect of the raw material increase
to the consumer? Why is it important to understand channel
margins and pricing practices?
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Worksheet: Metric 7 Break-Even
1) Apprentice Mousetraps wants to know how many units of its
“Magic Mouse Trapper” it must sell to break even. The product
sells for $20. It costs $5 per unit to make. The company’s fixed
costs are $30,000.
2) Apprentice Mousetraps wants to know how many dollars’ worth
of its “Deluxe Mighty Mouse Trapper” it must sell to break even.
The product sells for $40 per unit. It costs $10 per unit to make.
The company’s fixed costs are $30,000.
3) John’s Clothing Store employs three salespeople. It generates
annual sales of $1 million and an average contribution margin of
30%. Rent is $50