Marketing Essentials

Chapter 27: Pricing Math

Figures Online Action

Figure 27.1

Candy Store Profit
As manager of the Cavalier Candy Shop, you are putting together a price list for your store’s homemade confectionery. These are the items you are offering, followed by the cost of the materials involved in making each piece:

• English toffee, $0.12
• Caramel, $0.05
• Chocolate-covered raspberries, $0.35
• Chocolate-covered strawberries, $0.25

You sell these items for $1.25, $0.75, $1.70, and $2.50 respectively.

Activity
If you sell 1,000 of each item in a given month, and have fixed expenses for that month of $3,000, what would your net profit be?

Figure 27.2

Candy Store Markup
At the Cavalier Candy Shop, you offer a few products that you purchase from a wholesaler. They include:

• Candied cherries (wholesale cost: $1.20 per package)
• Chocolate golf balls (wholesale cost: $0.35 a piece)
• Chocolate coins (wholesale cost: $0.75 per bag)
• Candy straws (wholesale cost: $1.25 per package)

Activity
Assuming you want to end up with a 40 percent markup on retail, what should your prices be for each of the items?

Figure 27.3

MP3 Markup
Visit a local electronics store and conduct research about MP3 on the Internet. Notes the different prices.

Activity
What would the retail price be for a portable MP3 player that costs $75 to manufacture and that has a 25 percent markup on retail?