Speed: Marketing and High Medium Low

Assignment 2: - 21-Speed Gizmos: Break-even and marketing profitability. By Rohit Pratap Singh Questions:

1. Gizmos selling price at each suggested retail price? Ans:- |Retail Price |$124. 95 |$99. 95 |$74. 95 | |Selling Price |$87. 47 |$69. 97 |$52. 47 |
2. Break-even Volume of DCS assembly at $124. 95? $99. 95? $74. 95? Ans:- |Retail Price |$124. 95 |$99. 5 |$74. 95 | |Break-even Volume: |9392 |14073 |28056 |
3. Profit margin before taxes for 1993 and 1994 at $74. 95? Ans:- Profit Befor Tax @ $74. 95 in 1993 = $403,364 Profit Befor Tax @ $74. 95 in 1994 = $568,037
4. How would you price the DCS? I would price it at $99. 95. Would you launch the DCS? Yes, certainly I will.

Reasons:

1. Brake even in less than a year.
2. More than 100% profit in the very first year and subsequent years. 
3. Increased sales due to sales would consolidate its position in the market segment.
4. Profit Realization from DCS sales will provide extra income to invest in new products.
5. With Increasing revenues and Profits, Investors will become interested In Speed Gizmos thus opening new financial sources to fund new projects.

I would price it at $99. 95. Reason- Consider Following Profit Calulations | |Year |High |Medium |Low | |Retail price | |$124. 95 |$99. 5 |$74. 95 | |Selling Price | |$87. 47 |$69. 97 |$52. 47 | |Total Profit Before Tax |1993 |$698,006 |$699,197 |$403,364 | |Total Profit Before Tax |1994 |$921,608 |$923,036 |$568,037 | |Total Profit Before Tax |1995 |$1,189,929 |$1,191,644 |$765,644 | |Combined Profit | |$2,809,543 |$2,813,877 |$1,737,044 |

Maximum Profit in the first year and subsequent years considering same expenses and 20% increase in sales volume. Although there would be a threat of  Competitor’s entry at the same time, the chances of a higher rate of growth are more. Adding a radio option of $ 5 to the DCS will Change the Final Pricing of the material and break even at the same No. and similar Profits with the new cost.

The Following Pricing has to be adapted. | |High |Medium |Low | |Initial Retail Price |$124. 5 |$99. 95 |$74. 95 | |Initial Selling Price |$87. 47 |$69. 97 |$52. 47 | |Brake Even No. |9392 |14073 |28056 | |New Material Cost |29. 50 |29. 50 |29. 50 | |Final selling Price |$93. 35 |$75. 85 |$58. 35 | |Final Retail Price |$133. 35 |$108. 35 |$83. 35 |

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