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PRICING WHOLESALE AND RETAIL MARGINS

PRICING WHOLESALE AND RETAIL MARGINS. Gerald E. Smith MK-719 Boston College Carroll School of Management. PRICING CHAINS AND CHANNEL MARGINS. Customer Pays Retail Price P Ret Retailer Pays Wholesale Price P Who = P Ret x (100 - M Ret )/100

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PRICING WHOLESALE AND RETAIL MARGINS

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  1. PRICING WHOLESALE AND RETAIL MARGINS Gerald E. Smith MK-719 Boston College Carroll School of Management

  2. PRICING CHAINS AND CHANNEL MARGINS • Customer Pays Retail Price PRet • Retailer Pays Wholesale Price PWho = PRet x (100 - MRet)/100 • Wholesaler Pays Mfr Price PMfr = PWhl x (100 - MWho)/100 • Mfr Pays Target COGS COGST = PMfr x (100 - MMfr)/100

  3. CHANNEL MARGINANALYSIS $100 RM 40% $60 WM 20% $48 GM 50% $24 COGS 50%

  4. CHANNEL MARGINANALYSISLower Customer WTP WHAT IF . . . ? $85 RM 40% WM 20% GM 50% COGS 50%

  5. CHANNEL MARGINANALYSISEngineering Blows COGS WHAT IF . . . ? $85 RM 40% WHAT IF . . . ? WM 20% GM 50% $40 COGS 50% COGS 50%

  6. CHANNEL MARGINANALYSISWholesaler Demands More WHAT IF . . . ? RM 40% WHAT IF . . . ? $85 RM 40% WM 70% WHAT IF . . . ? WM 20% $48 GM 50% GM 50% $40 COGS 50% $24 COGS 50% COGS 50%

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