Determining Margin Potential

Finding the maximum amount of profit you can generate from one unit of a product is called Margin Potential. This is useful for a company when making a decision about whether to go into production or not. In its simplest form, you can calculate Margin Potential as:

Margin Potential $=$ Maximum Price $-$ Minimum Unit Costs

Price

Use the information table below to find the maximum price that customers deem acceptable. You can find this in the Customer Buying Criteria for each segment.

Minimum Material Cost

Calculate the minimum Material Cost per segment using the following equation and table below:

Minimum Material Cost Lowest Acceptable MTBF $\frac{\text{:}{?}^{**}{?}^{0}0\mathrm{.}30}{1000}$ Trailing Edge Material Cost

Customer Segment Information