Drinkworks: Calculating Gross Margin Prices noted in Exhibit 5 are retail selling proces to consumers. Use the data in cse (p. 6-8) to calculate gross margin for the device and pods. You may wish to evaluate alternative price points in developing your recommended price points. Device Cocktail Pods Retail Selling Price S Consumer Less Retail Margin (30%) C Wholesale Selling Price (WSP) S S Retailer Less Wholesale Margin (22.5%) NA C 0 Manufacturer Selling Price (MSP) Distributor 1 Less Excise on Alcohol Pods NA 2 MSP Net of Excise un Manufacturer .3 Less Cost of Goods un Gross Margin 5 16 Note: As you recall from pricing strategy in MKTG 505, a normal pricing objective is to find a profit maximzing price. However, marketers sometime consider other factors in a start-up (i.e., high penetration -- low price point] to secure a dominant position in the new category before competition catches up; or skimming (i.e, low penetration, high price point) to help recover investment costs. Additionally, there may be different pricing strategies for each of the products. 8