(Sales & Marketing) Price structure

Tip: Here is a worked example for the price structure of a bottle of perfume, as given to me by a student.  The vocabulary (Net Net, Margin 1, Margin 2 etc) is exactly as he used it, and he said it was standard. Use it as a model to discuss the price structure of your students’ own products.


Here is the price structure of a bottle of perfume. The figure of 100 for the retail price is nominal.

Retail Price                            100

Sales tax                                 16


Net Retail                                84

Retailer Profit                          34


Wholesale Price                      50

Returns                                    1


Net Sale Price                         49

Promotional discounts

in local market                        10


Net Net                                   39

Distributor Profit                     15


Margin 1                                 24

Marketing                               15

(local and international)


Margin 2                                  9

(final profit for producer)