• The Bare Bone model has a list price of $2.99. UVC is $1.50 and projected sales for the year is 2,000,000.
• Bill retails for $3.99 with a UVC of $1.79 and a sales forecast of 500,000.
• Projected first year sales of Bodacious Bill is 1,000,000 units.
• Fixed costs to enable insertion of sound effects for Bodacious Bill will be $2M for the first year.
  • The Bodacious Bill will have a 50% markup on the breakeven price.
    • Unit cost (breakeven price) = unit variable cost + (fixed cost/# of products produced).
    • List (markup) price = unit cost *(1+desired % markup on retail price).
  • Unit variable costs, including technical parts, add up to $4.99.
  • What would the list price on Bodacious Bill be to breakeven?
  • 50% of the first year sales would be incremental. Of the remaining volume, 80% will be cannibalized from Bill sales and 20% would be offset with Bare Bone volume.