Pricing 3 - Pricing - Mark-up % MU%(PB) = PE - PB PB Demand...

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Pricing - Mark-up % MU%(P B ) = P E - P B P B MU%(P E ) = P E - P B P E Demand Based M W R C Cost + M W R C
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1. Given 20% 40% ? M W R C Use MU%(P B ) $10 $40 What is the retailer’s mark-up %? .2 = P E -10 10 2 = P E - 10 P E = $12 20% 40% ? M W R C $10 $12 $40 .4 = P E -12 12 4.80 = P E -12 P E = $16.80 20% 40% ? M W R C $10 $12 $16.80 $40 P E - P B = % 40 - 16.80 = 138% P B 16.80 This was cost + pricing
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2. Given 20% 40% ? M W R C Use MU%(P E ) $10 $40 What is the retailer’s mark-up %? .2 = P E -10 P E . 2P E = P E - 10 P E = $12.50 20% 40% ? M W R C $10 $12 .50 $40 P E -12.50 20% 40% ? M W R C $10 $12.50 $20.83 $40 P E - P B = % 40 - 20.83 = 48% P E 40 10 = .8P E .4 = P E -12.50 P E .4P E = 12.50 = .6P E P E = $20.83
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3. Given 50% ? M R C Use MU%(P E ) $10 $15 P E 50% ? M R C $10 $20 $15 P E - P B = % 15-20 = -33% P E 15 .5P E = 10 .5 = P E -10 . 5P E = P E - 10 P E = $20 It IS possible to have a negative mark-up.
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3. Given 50% 120% M R C Use MU%(P E ) $10 ? What is price to consumer? Can’t work this, because we can’t have a MU%(P E ) > 100% (see retailer) unless we are paid to take the merchandise. Since there is an initial cost of $10, this problem does not make sense. 4. Given 10% M W R C Use MU%(P E ) $10 $20 What is the retailer’s mark-up %?
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Pricing 3 - Pricing - Mark-up % MU%(PB) = PE - PB PB Demand...

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