Product Pricing Calculations

You are an outside territory representative for the Total Health Vitamins Company with the Head Office in Switzerland. Your company is requesting that you find additional distribution channels by prospecting for new business opportunities in Canada to enter the Canadian market.

In your search for prospective accounts, you determine that Shoppers Drug Mart will represent substantial volume for your vitamin supplement. Shoppers Drug Mart has over 1,253 locations throughout Canada.

The current Canadian market sales for vitamin supplements is 20,980,000 bottles. Total Health Vitamins product has a potential 5% of the Canadian market share based on substantial research. The Shoppers Drug Mart chain holds a 36% market share for vitamin supplements.

Your list price is $9.50. Suggested retail is $19.99. Opening orders over 3,000 units will receive a 9% discount. Out of section displays qualify for an additional 6 % with proof of display. Shoppers Drug Mart stores require inventory turns of 8 times a year.

Round your percentages to one decimal point. Round your dollar amounts at the end of the calculation. Round all units up a whole number.

Question 1 (1 point)

What is the Gross Margin percentage based on cost (net price) if the retailer meets the requirements for both deals?

Question 2 (1 point)

What is the Gross Margin percentage based on cost (net price) for the 9% discount?

Question 3 (1 point)

What is the Gross Margin percentage based on selling price with the 9% discount?

Question 4 (1 point)

What is the Gross Margin percentage based on the selling price if the retailer meets the requirements for both deals?

Question 5 (1 point)

What is the Gross Margin percentage based on the selling price (retail)?

Question 6 (1 point)

What is the Gross Margin percentage based on cost (net price) for only the 6% deal, that is, if the retailer does not buy enough for the quantity discount but provides the display?

Question 7 (2 points)

What is the maximum number of bottles you would recommend for the opening order and why?

Question 8 (1 point)

What is the Gross Margin percentage based on the selling price with only the 6% deal, that is, if the retailer does not buy enough for the quantity discount but provides the display?

Question 9 (1 point)

What is the total cost of the opening order for the maximum opening order?

Question 10 (2 points)

What is the minimum number of bottles you would recommend for the opening order if the retailer wants both discounts? Why?

Question 11 (1 point)

What is the Gross Margin percentage based on cost (list price)?