11-29-2018, 12:15 AM

extracts from one of the Working with your Business Consultant Professional Calculator series booklets.

Setting a Sales Price …

One method of setting a unit sales price is to determine the unit cost

of production then multiply by the desired rate of return. For this

method to be accurate, you must identify all costs associated with the

product.

formula

PRICE=COST÷UNITS×(1+%RTN÷100)

where

PRICE = price per unit

COST = total costs

UNITS = number of units produced

%RTN = desired percent rate of return

Forecasting Sales of Accessories …

Many products have optional accessories or peripheral products. For

example, cars have lots of extras and computers have software and

optional equipment.

The sales forecasts of these optional items can be based on a percent-

age of the sales of the main product. The following equation helps

determine sales forecasts of these optional products.

formula

#OPT=#MAI×(%MAI÷100)

where

#OPT = units of the optional product

#MAI = units of the main product

%MAI = percent of main product

Revising Your Forecast to Reflect Current Market Conditions …

Most sales forecasts are based on certain assumptions about, and

incomplete knowledge of, your market and competition. After the

forecasts are made, internal and external changes make your original

assumptions and your forecast incomplete. Examples of these changes

in the market that were not reflected in the original forecast are a

price drop (yours or your competitiors), advertising or promotional

campaign, rebate offer, introduction of a new product by a competitor,

or a change in distribution of your product. The formulas below helps

you revise your forecast, based on the perceived impact of the market

changes.

formula

NEWF=BASE+((A%+B%+C%)÷100)×BASE

where

BASE = original forecast

%A = expected change in sales for change in market A

%B = expected change in sales for change in market B

%C = expected change in sales for change in market C

Planning Advertising Expenditures …

The advertising-sales ratio helps marketers and advertisers determine

how much money to spend for advertising, based on projected sales.

To use the formula below, you need to know the forecast unit sales,

revenues per unit, and the percent of sales to be spent on advertising.

formula

AD$=#UNI×$REV×(AD%÷100)

where

AD$ = advertising cost

#UNI = forecast number of units sold

$REV = revenue per unit in dollars

AD% = advertising as percent of sales in dollars

SlideRule

Setting a Sales Price …

One method of setting a unit sales price is to determine the unit cost

of production then multiply by the desired rate of return. For this

method to be accurate, you must identify all costs associated with the

product.

formula

PRICE=COST÷UNITS×(1+%RTN÷100)

where

PRICE = price per unit

COST = total costs

UNITS = number of units produced

%RTN = desired percent rate of return

Forecasting Sales of Accessories …

Many products have optional accessories or peripheral products. For

example, cars have lots of extras and computers have software and

optional equipment.

The sales forecasts of these optional items can be based on a percent-

age of the sales of the main product. The following equation helps

determine sales forecasts of these optional products.

formula

#OPT=#MAI×(%MAI÷100)

where

#OPT = units of the optional product

#MAI = units of the main product

%MAI = percent of main product

Revising Your Forecast to Reflect Current Market Conditions …

Most sales forecasts are based on certain assumptions about, and

incomplete knowledge of, your market and competition. After the

forecasts are made, internal and external changes make your original

assumptions and your forecast incomplete. Examples of these changes

in the market that were not reflected in the original forecast are a

price drop (yours or your competitiors), advertising or promotional

campaign, rebate offer, introduction of a new product by a competitor,

or a change in distribution of your product. The formulas below helps

you revise your forecast, based on the perceived impact of the market

changes.

formula

NEWF=BASE+((A%+B%+C%)÷100)×BASE

where

BASE = original forecast

%A = expected change in sales for change in market A

%B = expected change in sales for change in market B

%C = expected change in sales for change in market C

Planning Advertising Expenditures …

The advertising-sales ratio helps marketers and advertisers determine

how much money to spend for advertising, based on projected sales.

To use the formula below, you need to know the forecast unit sales,

revenues per unit, and the percent of sales to be spent on advertising.

formula

AD$=#UNI×$REV×(AD%÷100)

where

AD$ = advertising cost

#UNI = forecast number of units sold

$REV = revenue per unit in dollars

AD% = advertising as percent of sales in dollars

SlideRule