Assuming Rock Bottom’s cost of goods sold (COGS) is 60 percent, calculate Rock Bottom’s margin per driver before the $50 off promotional price and after the promotional price. What effect does the promotional pricing have on the margin Rock Bottom earns for every driver sold?

Rock Bottom Golf is an online golf equipment retailer that sells clubs, shoes, balls, and all the other gadgets golfers could ever need. Rock Bottom’s prices are lower than those of most brick-and-mortar golf and sporting goods retailers but they often go even lower with limited-time promotional pricing, especially around major holidays. For example, the Father’s Day promotion offers $50 off Rock Bottom’s already low price on select clubs and range finders that normally cost hundreds of dollars. One current offer is $50 off the Tour Edge EX10 Driver that Rock Bottom normally sells for $249.99. To get the word out about the offer, Rock Bottom spent $10,000 on banner ads on golf-related websites like golfchannel.com and pga.com. Rock Bottom understands that promotional pricing cuts into its profits for each sale but also knows that such pricing generates excitement and a sense of urgency among buyers because of the limited time the promotional price is available. In fact, Rock Bottom’s research of past Father’s Day promotions shows that it’s mostly men buying the clubs and gadgets for themselves!