Question

Many luxury sheets cost less than? $200 to make but sell for more than? $500 in retail stores. Some cost even more consumers pay almost? $3,000 for? Frett'e "Tangeri?Pizzo" king-size luxury linens. The creators of a new brand of luxury? linens, called Boll? & Branch, have entered this market. They want to price their sheets lower than most brands but still want to earn an adequate margin on sales. The sheets come in a luxurious box that can be reused to store? lingerie, jewelry, or other keepsakes. The Boll? & Branch brand touts fair trade practices when sourcing its? high-grade long-staple organic cotton from India.

The company calculated the price to consumers to be$430.

If the company decides to sell through retailers instead of directly to consumers? online, to maintain the consumer price at?$430?,

at what price must it sell the product to a wholesaler who then sells it to? retailers? Assume wholesalers desire a 15percent margin and retailers get a 20percent? margin, both based on their respective selling prices.

The retail margin is ?$?(Round to the nearest? cent.)

Answer 1

Solution

Final price to consumers (Maximum Retail Price) = $430

Wholesaler Margin = 15%

Retailer Margin = 20%

Margin of Retailers = ($430*20%) = $86

Cost to Retailers or sale price of Wholesalers = ($430 - $86) = $344

Margin of Wholesalers = ($344*15%) = $27.52

Cost to wholesalers = ($344 - $27.52) = $316.48

Hence,

1) - Selling price by frette to wholesalers = $316.48

2) - Then wholesalers will sale to retailers at $344 earning $27.52 (15%) Margin

3) - Then Retailers at the end sale to consumers at $430 earning $86 (20%) Margin.