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Rock Bottom Golf is an online golf equipment retailer that sells clubs, shoes, balls, and all the other gadgets golfers could ever need. Rock Bottom
Rock Bottom Golf is an online golf equipment retailer that sells clubs, shoes, balls, and all the other gadgets golfers could ever need. Rock Bottoms prices are lower than those of most brickandmortar golf and sporting goods retailers, but they often go even lower with limitedtime promotional pricing, especially around major holidays. For example, the Fathers Day promotion offers $ to $ off Rock Bottoms already low price on select clubs and range finders that normally cost hundreds of dollars. One current offer is $ off the Tour Edge E Driver that Rock Bottom normally sells for $ To get the word out about the offer, Rock Bottom spent $ on banner ads on golfrelated websites like wwwgolfchannel.com and wwwpga.com. Rock Bottom understands that promotional pricing cuts into its profits for each sale but also knows that such pricing generates excitement and a sense of urgency among buyers because of the limited time the promotional price is available. in fact, Rock Bottoms research of past Fathers Day promotions shows that its mostly men buying the clubs and gadgets for themselves!
Assuming Rock Bottoms cost of goods sold COGS is percent, calculate Rock Bottoms margin per driver before the $ off promotional price and after the promotional price. What effect does the promotional pricing have on the margin Rock Bottom earns for every driver sold? How many additional drivers must Rock Bottom sell to break even on this promotion? Assume the $ spent on banner ads is the only fixed cost associated with this promotion
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