Loading page
Veteran owned · American made · Honor · Serve · Inspire
Loading page
Price a fictional luxury chocolate bar for direct and wholesale sales. Use landed cost, gross margin, and a discount test before making a decision.
Start with the interactive price file. Move costs, price, and discount; see margin and break-even change; then work through four short explanations and a final transfer check. Progress stays on this device only.
Open printable study guide / Save as PDF ↗
INTERACTIVE FILE / FICTIONAL CHOCOLATE LAUNCH
Change one input and watch the cost stack, margin, and break-even point respond. This is practice data, not an Aim High Hero product quote.
$20.00 sale − ($7.00 product + $2.00 packaging + $3.00 freight) = $8.00 per sale
PREDICT / TEST / EXPLAIN
Compare break-even units at the current discount against the same case without the discount.
After this lesson: Separate markup on cost from gross margin on price.
Markup divides gross profit by cost; gross margin divides it by price. Confusing their denominators can make a price look safer than it is. Gross margin here excludes overhead and tax.
A bar sells for $20 and costs $12 per unit. Gross profit is $8. Markup is $8 ÷ $12 = 66.7%; gross margin is $8 ÷ $20 = 40%.
Apply it: Review a proposed price before stating its margin to a wholesale buyer.
After this lesson: Include per-unit packaging and inbound freight in a decision.
The decision cost should include relevant variable costs beyond the ingredient or purchase price. Allocate inbound freight over the units received; keep fixed overhead distinct. Use actual supplier quotes when pricing for sale.
The chocolate costs $7, packaging $2, and inbound freight $150 for 50 bars ($3 each). Landed unit cost is $7 + $2 + $3 = $12.
Apply it: Compare an ingredient-only estimate with a fully landed unit cost.
After this lesson: Check contribution at each selling price.
A retailer buying wholesale pays less than a direct customer. Check each channel's selling price minus channel-specific variable cost and fees. Do not assume direct sales are automatically more profitable; fulfillment costs may differ.
Direct price $24 less $12 landed cost and $4 direct fulfillment leaves $8. Wholesale price $17 less $12 landed and $1 handling leaves $4. Both contribute, but volume and fixed costs matter.
Apply it: Choose a channel using contribution and capacity, not a headline price alone.
After this lesson: Estimate how a promotion changes contribution and the units needed to cover fixed cost.
A discount reduces the selling price without automatically reducing unit cost. Calculate the new contribution, then divide fixed campaign cost by contribution. A lower margin may require much higher volume to pay for the promotion.
Normal $20 price less $12 variable cost gives $8. A 20% discount sets price at $16, leaving $4. A $200 campaign cost needs 50 discounted sales to cover, before other fixed costs.
Apply it: Decide whether a holiday promotion has enough evidence of extra units sold.
Three new scenarios check what you retained. A missed answer opens a worked explanation and a reworded question.
Loading practice…
Loading practice…
Loading practice…
This preview does not create a verified grade, enrollment, certificate, or purchase. No personal answers leave this browser.
Original Aim High Hero explanations and fictional exercises. The external source provides subject reference and does not endorse this course.
U.S. Small Business Administration — Break-even analysis ↗