L3 Flashcards
initial markup
initial markup refers to the margin or markup added to the cost of goods to set the initial selling price
maintained markup
maintained markup is the actual sales you get from the merchandise less its cost ( including any markdowns, discounts, inventory shrinkages due to shoplifting, brakage and loss)
formula for initial markup percentage (at retail)
(planned retail operating expenses + planned profit +.planned retail reductions ) / (planned net sales + planned retail reductions)
difference between initial markup and maintained markup
initial markup is the difference between the retail selling price originally placed on the merchandise and the cost of merchandise, whereas maintained markup is the actual sales you get for the merchandise minus its cost.
retail price formula
cost + markup
markup % formula
(retail price-merchandise cost) / retail price
reasons for taking markdowns
- meet the lower price from competitors
- inventory overstocking
- increase customer traffic
- reduce the assortment if odds and ends ‘optimising markdown decisions
markdown percentage
(total dollar markdown / net sales) x 100%
key performance metrics for customer transactions
- ATV = Average transaction value ( a customers average spent in one transaction
= Total revenue / total no. of transactions - Average no. og items per order = a customers average no. of items purchased in one transaction
= total no. of items sold / total no. of order - conversion rate = the % of visitors who made purchases compared to total no.of visitors
= no of orders/ total no. of store visitors x100%
Break-even quantity
break even quantity equals total fixed cost divided by actual unit sales price minus unit variable cost
break even quantity = (total fc)/(unit sales price - unit VC)
break even analysis
how much merchandise must be sold to achieve a break-even(zero) profit
