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 $380. If the company decides to sell through retailers instead of directly to consumers? online, to maintain the consumer price at ?$380, at what price must it sell the product to a wholesaler who then sells it to? retailers? Assume wholesalers desire a 12 percent margin and retailers get a 15 percent? margin, both based on their respective selling prices.

Answer 1

We will solve this problem using reverse calculations. We use the following formulas to solve this problem:

Solution:

*All prices in $.