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A company sells shoes and, as the market leader, can charge a premium of 20% over the competition. The shoes are imported and a typical
A company sells shoes and, as the market leader, can charge a premium of 20% over the competition. The shoes are imported and a typical pair of shoes (pair ABC) costs 9 with an additional charge of 5% for import duty. The remaining variable costs per pair are estimated at 1.35 to store, transport and sell a pair of shoes. Target contribution margin is 55% of sales price. The nearest competitor incurs similar variable costs and sets price so as to generate 40% contribution margin.
- What is the economic value to the customer for pair ABC
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