Additional Information

Given overhead divided by projected sales = overhead per unit

$1,000,000 2,000,000 = $.50 per unit (allocated fixed cost per unit)

Direct cost less quantity discounts

Duo-PakRefill

$2.68$2.04

-.08-.04

$2.60$2.00

Direct cost per unit plus allocated fixed cost per unit

Duo-PakRefill

$2.600$2.000

+.500+.500

$3.100Cost per unit$2.500

1.Calculate the even cent breakeven SRP for the Duo-Pak and the Refill.

A.10 % Brokers' commission and price to retailers*

Duo-PakRefill

$3.100Cost per unit90 %$2.500

Brokers' Commission10 %*

$3.444Price to Retailers100 %

B.Retailers margin and breakeven SRP*

Duo-PakRefill

$3.444Price to Retailers75 %

Retailers margin25 %*+.926

Breakeven SRP 100 %

Even cent Breakeven SRP

*markup on selling concept required

2.Perform a brief competitive analysis of PPI's revealed competitors (Windex, premium and value).Include: 1) primary objective, 2) proximity to PPI and 3) strengths /weaknesses in the team response.

Windex

Premium

Value

3.Select competitor(s) to attack and avoid.

Attack

Avoid

4.Consider the breakeven SRP, competitive analysis and basic pricing concepts (psychological pricing, captive-product and

premium pricing); and establish an initial suggested retail price for the Duo-Pak and the Refill.Justify your prices.

Duo-Pak SRP $Refill SRP $

Strategic and tactical price determination considerations for an actual Hillcrest SRP setting: Psychological pricing, Captive-Product, Competitive Analysis and Premium pricing

Justification

PPI Glass Cleaner Numbers*

A.Given overhead divided by projected sales = overhead per unit

$1,000,000 2,000,000 = $.50 per unit (allocated fixed cost per unit)

B.Direct cost less quantity discounts

Duo-PakRefill

$2.68$2.04

-.08-.04

$2.60$2.00

C.Direct cost per unit plus allocated fixed cost

Duo-PakRefill

$2.600$2.000

+.500+.500

$3.100Cost per unit$2.500

D.10 % Brokers' commission and price to retailers

Duo-PakRefill

$3.100Cost per unit 90 % $2.500

.344Brokers' Commission10 %*+.278

$3.444Price to Retailers 100 %$2.778

E.Retailers margin and breakeven SRP

Duo-PakRefill

$3.444Price to Retailers 75 %$2.778

1.148Retailers margin 25 %*+.926

$4.592Breakeven SRP 100 %$3.704

$4.60Even cent Breakeven SRP$3.71

*markup on selling concept required