Real-Life Math
Your company sells electronic circuits for a wide variety of electronic
devices.
As a sales professional, part of your job is to prepare cost
estimates for prospective clients. As in many sales transactions, it's
cheaper to buy from your company in bulk. The more stock you sell to customers,
the less your company has to pay to keep it in a warehouse. Much better to
have the money in the bank!
To encourage clients to buy more, your
company offers an incentive called a price break. Your company's price
break for circuits looks like this:
| Break 1 | Break 2 |
| 1-100 | 101-499 | 500 + |
| -- | 10% | 20% |
There is no price break if the client buys 100 circuits or less.
If they buy over 100 circuits, they get 10 percent off the price. If they
buy over 500, they get 20 percent off.
Your client is planning to manufacture
an electronic component for a heart rate monitor. The price of a circuit without
a discount is $20.
The client has asked to see what it would cost to
buy 100 circuits, 400 circuits and 500 circuits. When you've crunched
out the numbers, recommend what you feel is the customer's
best value.