The Foundry is the product design subsidiary of the UAE-based design studio Tinkah. The Foundry designs and manufactures Khaleeji-inspired coffee sets and briefcases using natural materials and colors. Assume it is considering an advertising campaign in the UAE to promote its range of pottery and ceramics. The brand is considering spending $5,000 on advertising to support a product premium offer. They will offer a stackable bowl set (worth $80) free for every $1,000 customers spend on other products from the range. The focus of the advertising will be social media and leaflets in shopping malls.

If The Foundry's markup percentage on selling prices is 65 percent, what margin will they realize for each bundle of products purchased during the premium offer? How many additional bundles would they need to sell to break even on this premium offer? Refer to Break-Even and Margin Analysis in Appendix 2: Marketing by the Numbers to learn how to perform this analysis.

Data from Appendix 2

The previous analyses derived a value-based price of $171 for Wise Domotics’s product. Although this price is higher than the break-even price of $152 and covers costs, that price assumed a demand of 1.5 million units. But how many units and what level of dollar sales must Wise Domotics achieve to break even at the $171 price? And what level of sales must be achieved to realize various profit goals? These questions can be answered through break-even and margin analysis.