Question

For retailers buying direct from the manufacturer, the MSP represents their product cost, which they will...

For retailers buying direct from the manufacturer, the MSP represents their product cost, which they will mark up to set the retail price. If a SKU has a MSRP of 10.00, calculate the MSP (cost to channel) and retail price for each SKU.

SKU #1

SKU #2

SKU #3

Channel Discount

20%

25%

30%

Cost to Channel

Channel Margin

20%

20%

23%

Retail Price
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Homework Answers

Answer #1

Given MSRP = $10.00

MSP (i.e., Cost to Channel ) = MSRP * (1-Channel discount%)

Retail Price = Cost to Channel * ( 1 + Channel Margin%)

For SKU#1, MSP = 10 *(1-0.2) = $8

Retail Price = $8 * ( 1+ 0.2) = $9.6

Similary for the other two SKUs, MSP & Retail Price are calculated using excel shown below.

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