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Marketing Indicator 2.11

This article discusses different types of charges and discounts associated with purchases, including credit card fees, travel and entertainment card fees, and various discount schemes. It also explains how charges and discounts can affect the overall price of purchases and the importance of correctly calculating them. The article also covers the calculation of taxes and shipping charges and the use of technology to speed up calculations.

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Marketing Indicator 2.11

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  1. Marketing Indicator 2.11 Process the sale to complete the exchange.

  2. Types of Charges Associated with Purchases • Credit card fee (percent of sales based on a sliding scale) • Travel and entertainment cards is slightly higher than bank cards • 1.79% (MC/Visa) - 3.25% (Am Ex) • Debit card fee (flat fee no matter how much purchase is)

  3. Types of Discounts Associated with Purchases • Purchase Discount – set amount of money that a business saves on a specific order if the payment is made within a certain period of time. • Ex: A purchaser bought a $100 item, with a purchase discount term 3/10, net 30. If he pays within 10 days, he will only need to pay $97. If not, the amount needs to be fully paid within 30 days. • 3/10, net 30 (3% discount/pay within 10 days, if not – pay in full within 30 days) • Bulk discounts – purchasing a large quantity and getting a discount on the price

  4. How do charges and discounts affect the price of purchases? Can increase the cost of items, overall, to cover credit card charges and frequent discounts Retailers want to make money, so they pass the charges/loss of revenue because of discount down to the customer

  5. Tax TableSales Tax and Example • Your store ships products worldwide from one fulfillment center. You must collect a 15% sales tax on orders shipped to geographical zone A and a 7% sales tax on orders shipped to geographical zone B. You do not need to collect sales tax for orders shipped to other regions in the world. The following table summarizes the taxes that must be collected:

  6. Calculate Basic Math Convert fractions to percent. Divide the numerator of the fraction by the denominator. Example: ½ = 1 ÷ 2 = .50 = 50%

  7. Calculate Basic Math (cont.) • Convert percent to decimals. • Move the decimal point two places to the left. • Example: 60% = .60

  8. Calculate Basic Math (cont.) • Convert decimals to percent. • Move the decimal point two places to the right. • Example: .63 = 63%

  9. Calculate Tax on Purchases • Using the tax rates on the right, what would the tax amount be for the following? • $125 purchase in Zone A • $125 x = • $68.75 purchase in Zone B • $68.75 x =

  10. Shipping/Delivery TableShipping Charges and Example You must also charge shipping for orders shipped to geographical zone A and geographical zone B. For shipments to addresses in geographical zone A, shipping charges are $15, while shipping charges are $10 for shipments to addresses in geographical zone B. The rest of the world is subject to $25 shipping charges.

  11. How does technology speed up calculations of charges and discounts? • Don’t have to figure “in your head” or by hand calculations of charges and/or discounts • Cash register/POS (point of sale) terminal/Register does it for you, so you don’t have to make change • Ex: $6.65 sale. You are given a $10 bill. How will you make change? • Lessens the time taken to double check figures.

  12. What is the impact of incorrectly calculating charges/discounts? • Drawer/register doesn’t balance • Costs the retailer money • May cost the retailer a customer • Ex: Overcharging the customer • Ex: Customer loses confidence in store, as the transaction wasn’t correct • Takes time to redo the sale/void out the previous transaction • Books/accounting don’t reconcile

  13. Understand the Cash Drawer • Opening cash fund • The opening cash drawer contains the coins and currency for the day’s business. • If there is more than planned in drawer, the till is over. • If there is less than planned, the till is short. • Report discrepancies to supervisor. • Balancing the Cash Drawer • At end of shift, the drawer must be balanced. • The money must be counted and a balance report filled out.

  14. Complete Sales Transaction • The extension is the result of multiplying the number of units by the cost per unit. • Add item amounts. • Calculate sales tax and total. • Ex. 3 t-shirts at $15 each 3 x $15 = • 2 pants at $20 each 2 x $20 = • Subtotal + = • 7% sales tax x = • Total: + =

  15. Cost of Merchandise Sold • The cost of merchandise sold is the amount a retailer actually pays for merchandise. The cost of merchandise sold is determined by quoted wholesale cost, discounts, and transportation charges. • One of the major expenses for wholesalers and retailers is the cost of merchandise purchased for resale.

  16. Calculate Markdowns Markdowns are the most common type of price change. Markdowns are used as a tool to stimulate sales, dispose of slow moving/discontinued merchandise, meet competitors’ prices and increase customer traffic. MARKDOWN (MD) = RETAIL PRICE X MD% $25 = $100 X 25%

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