The half-day workshop is designed to help anyone that creates proposals, quotes, or RFQs to customers, or manages Distributors, Rep’s, or VARs. The typical attendees include the: Sales, Marketing, and Finance functions. How can it benefit you? By providing new skills for your job today, or the one you want tomorrow. For most - it provides new skills to solve everyday business challenges. For some - it may be a refresher of skills you already have. For all - you will leave having gained some new skill. What does the workshop cover? Everyday challenges for sales, marketing and finance: 1. GM, Cost, and Price Relationships 2. Income (Expense), Profit (Loss), and GM Relationship 3. Calculate Compound Annual Growth Rate (CAGR) 4. How to create a Price Model 5. The impact of price changes on Revenue and Profit 6. Pareto Analysis (the 80/20 Rule) 7. Calculate Monthly Quota for an Annual Forecast 8. Calculate Quarterly Prices for a Step Price Proposal

1. Power-Up Sales
with the
Math Workshop

2. Topics
Everyday challenges for sales, marketing and finance:
1. GM, Cost, and Price Relationships
2. Income (Expense), Profit (Loss), and GM Relationship
3. Calculate Compound Annual Growth Rate (CAGR)
4. Creating and using a Price Model
5. The impact of price changes on Revenue and Profit
6. Pareto Analysis (the 80/20 Rule)
7. Calculate Monthly Quota for an Annual Forecast
8. Calculate Quarterly Prices for a Step Price Proposal
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3. Scenario’s
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4. Scenario 1
Cost, ASP, and GM
Problem 1: Distributor says the competition is selling the product for
$3.25, and his cost is $1.50.
What is his GM?
Problem 2: Distributor says he can’t charge more than $4.00, and he
needs to make 25% GM on this deal.
What does his cost need to be?
Problem 3: The distributor cost is $7.25, and you know he is getting
25% GM.
What will his selling price be?
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5. Scenario 2
Income, Expense, and Profit
Problem 4: Our GM is 50% and we want to buy a printer for $1,000,
what amount of incremental income is required?
Problem 5: Our GM is 5% and our ASP is $10, how many units do we
need to sell to generate a profit of $2,000?
Problem 6: Our income was $25M and COGS was $18M, what is our
GM in percent?
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6. Scenario 3
Compound Annual Growth Rate (CAGR)
Problem 7: CEO wants CAGR data in your report to the BOD
(Note: each year referenced to 2000)
$300,000
$240,000
Revenue
$180,000
$120,000
$60,000
$0
2000 2001 2002 2003 2004 2005 2006
Revenue $76,627 $111,389 $82,821 $136,111 $187,442 $256,620 $251,487
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7. Scenario 4
Price Model
Problem 8: Marketing provided this Price Model, and you need to
determine the GM for the missing unit quantities for your Price Book.
GM vs Units
80.0%
70.0%
GM
60.0%
50.0%
Price Model 1 10 100 500 1k 5k 10k 20k 50k 100k 1,000k
82% 82% 80% 78% 70% 55% 45%
40.0%
1 10 100 1,000 10,000 100,000 1,000,000
Units
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8. Scenario 5
Price Drop – Maintain Revenue
Problem 9: Our Super Widget had a subtle, but constant price erosion
of 5% in the second and third year after it was introduced. How many
more units must be sold to meet the same revenue as when the
SuperWidget was introduced?
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9. Scenario 6
Price Drop – Maintain Profit
Problem 10: Our GM was 15%, and we decreased our ASP by 5%.
How many more units must be sold?
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10. Scenario 7
Pareto Analysis, the 80/20 Rule
Problem 11: Determine the vital few for new Key Accounts Program
Cust Rev
1 P $350
2 F $25,180
3 K $7,885
4 L $5,285
5 M $4,327
6 D $105,118
7 C $116,038
8 A $225,767
9 N $3,840
10 I $10,809
11 J $8,770
12 E $57,021
13 H $11,456
14 B $169,793
15 Q $200
16 O $856
17 G $12,153
$764,848
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11. Scenario 8
Forecast
Problem 12: CEO wants a $10M annual quota with 14% growth.
Calculate the monthly quota amounts that total $10M, and reflect the
required growth.
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12. Scenario 9
Step Pricing
Problem 13: You agreed to sell the client 2MU @ $4.00 each, but he
will not commit to taking all 2M units.
Determine quarterly prices, so that if he buys all 2M units his average
price will be $4.00, but if he buys fewer units his price will be higher.
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13. Answers
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14. GM, Cost, and Price
Problem 1: Distributor says the competition is selling the product for
$3.25, and his cost is $1.50.
What is his GM?
Solution: 53.85%
Problem 2: Distributor says he can’t charge more than $4.00, and he
needs to make 25% GM on this deal.
What does his cost need to be?
Solution: $3.00
Problem 3: The distributor cost is $7.25, and you know he is getting
25% GM.
What will his selling price be?
Solution: $9.67
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15. Income, Expense, and Profit
Problem 4: Our GM is 50% and we want to buy a printer for $1,000,
what amount of incremental income is required?
Solution: $2,000
Problem 5: Our GM is 5% and our ASP is $10, how many units do we
need to sell to generate a profit of $2,000?
Solution: 4,000
Problem 6: Our income was $25M and COGS was $18M, what is our
GM in percent?
Solution: 28%
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16. Compound Annual Growth Rate
$300,000 50%
1
Yrn n
$240,000
CAGR 1 x100 40%
Yr1
$180,000 30%
Revenue
CAGR
$120,000 20%
$60,000 10%
$0 0%
2000 2001 2002 2003 2004 2005 2006
Revenue $76,627 $111,389 $82,821 $136,111 $187,442 $256,620 $251,487
CAGR 45.37% 3.96% 21.11% 25.06% 27.34% 21.91%
Problem 7: CEO wants CAGR data in your report to the BOD
(Note: each year referenced to 2000)
Solution: See data table
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17. Price Model
y = -0.0362Ln(x) + 0.65
Problem 8: Marketing provided this Price Model, and you need to
determine the GM for the missing unit quantities for your Price Book.
Solution: See equation y=mx+b (for logarithmic x axis)
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18. Price Drop – Maintain Revenue
Price Erosion, Units to Maintain Revenue $
100% 95.31%
Problem 9: Our Super Widget
had a subtle, but constant price
80%
62.83% erosion of 5% in the second and
Unit Increase
60%
third year after it was
37.17%
40% introduced. How many more
16.64%
20% units must be sold to meet the
0%
same revenue as when the
-5% -10% -15% -20%
Price Erosion in % SuperWidget was introduced?
Yr 1 Yr 2 Yr 3
Solution: 16.64%
Note: A small price erosion, compounded over time, can amount to a large difference for the
sales team to overcome.
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19. Price Drop – Maintain Profit
Price Erosion, Units to Maintain Profit
100%
90%
80%
70%
60%
50%
Units
40%
30%
20%
10%
0%
50% 45% 40% 35% 30% 25% 20% 15% 10%
GP
5% PE 10% PE 20% PE
Problem 10: Our GM was 15%, and we decreased our ASP by 5%.
How many more units must be sold?
Solution: 50.0%
Note: A small price drop requires much higher volume to maintain profitability with low GM
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20. Pareto Analysis, the 80/20 Rule
Cust Rev
Rev Cum Rev % Rev % Cum Rev % Cust
1 AP $225,767
$350 $225,767 29.5% 29.5% 5.9%
2 BF $169,793
$25,180 $395,560 22.2% 51.7% 11.8%
3 KC $116,038
$7,885 $511,598 15.2% 66.9% 17.6%
4 DL $105,118
$5,285 $616,716 13.7% 80.6% 23.5%
5 ME $57,021
$4,327 $673,737 7.5% 88.1% 29.4%
6 DF $105,118
$25,180 $698,917 3.3% 91.4% 35.3%
7 GC $116,038
$12,153 $711,070 1.6% 93.0% 41.2%
8 HA $225,767
$11,456 $764,848 1.5% 94.5% 47.1%
9 NI $10,809
$3,840 $721,879 1.4% 95.9% 52.9%
10 JI $10,809
$8,770 $730,649 1.1% 97.0% 58.8%
11 KJ $8,770
$7,885 $738,534 1.0% 98.1% 64.7%
12 EL $57,021
$5,285 $743,819 0.7% 98.7% 70.6%
13 MH $11,456
$4,327 $748,146 0.6% 99.3% 76.5%
14 NB $169,793
$3,840 $751,986 0.5% 99.8% 82.4%
15 QO $200
$856 $752,842 0.1% 99.9% 88.2%
16 OP $856
$350 $753,192 0.0% 100.0% 94.1%
17 QG $12,153
$200 $753,392 0.0% 100.0% 100.0%
$764,848
$764,848
Problem 11: Determine the vital few for new Key Accounts Program
Solution: Customers A, B, C, and D should be Key Accounts
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21. Forecast
Scenario 1
Forecast Given: Quota ($) Sn 10,000,000
Given: Growth Rate (%) y 14.00%
900,000 887,850 First Term a1 13
877,938 Number of Terms n 12
880,000 868,026 Difference d 9,912
858,114
860,000 848,202 Find: Term 1 a1 778,816
838,289 Find: Term 2 a2 788,728
840,000 828,377 Find: Term 3 a3 798,641
818,465 Find: Term 4 a4 808,553
820,000 808,553 y = 9912.2x + 768904 Find: Term 5 a5 818,465
798,641 R² = 1 Find: Term 6 a6 828,377
800,000 788,728 Find: Term 7 a7 838,289
778,816 Find: Term 8 a8 848,202
780,000 Find: Term 9 a9 858,114
Find: Term 10 a10 868,026
760,000 Find: Term 11 a11 877,938
Find: Term 12 a12 887,850
740,000 Total 10,000,000
Q1 2,366,185
720,000 Q2 2,455,395
a12
a10
a11
a1
a2
a3
a4
a5
a6
a7
a8
a9
Q3 2,544,605
Q4 2,633,815
10,000,000
Problem 12: CEO wants a $10M annual quota with 14% growth.
Calculate the monthly quota amounts that total $10M, and reflect the
required growth.
Solution: See table and graph above
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22. Step Pricing
$/Mo Units/Mo ASP
Step Pricing Find: Term 1 a1 720,721 166,667 4.32
Find: Term 2 a2 710,893 166,667 4.27
Find: Term 3 a3 701,065 166,667 4.21
$5.20 Find: Term 4 a4 691,237 166,667 4.15
Find: Term 5 a5 681,409 166,667 4.09
Find: Term 6 a6 671,581 166,667 4.03
Find: Term 7 a7 661,753 166,667 3.97
$4.70
Find: Term 8 a8 651,925 166,667 3.91
$4.27 Find: Term 9 a9 642,097 166,667 3.85
$4.09 Find: Term 10 a10 632,269 166,667 3.79
$4.20
Price Each
Find: Term 11 a11 622,441 166,667 3.73
$3.91
Find: Term 12 a12 612,613 166,667 3.68
$3.73
Total Price 8,000,000 2,000,000
$3.70
Q1 $ 4.27 0 500,000
Q2 $ 4.09 500,001 1,000,000
Q3 $ 3.91 1,000,001 1,500,000
$3.20 Q4 $ 3.73 1,500,001 2,000,000
Avg Price $ 4.00
$2.70
Q1 Q2 Q3 Q4
Problem: 17 Quarters
Problem 13: You agreed to sell the client 2MU @ $4.00 each, but he
will not commit to taking all 2M units. Determine quarterly prices, so
that if he buys all 2M units his average price will be $4.00, but if he
buys fewer units his price will be higher.
Solution: See table and graph above
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23. Contact Us
Easy as 1-2-3 to learn more about Improving Performance
with the
Sales Math Workshop
1. 2. 3.
+1.770.985.6599 john@corbittassociates.com CorbittAssociates.com
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