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Published byAleesha Wright Modified over 6 years ago

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Optimum Distribution Formula What is the probability of selling the next copy distributed? How much did it cost to distribute/produce that copy?

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Variables Affecting Title Economics Publisher Discount Retailer Discount Cover Price Sales Variability from Issue to Issue Operational Costs (Metro) Average Cost per Unit: $0.21 Variable Cost per Unit: $0.14 How Much Does it Cost to Distribute One More Unit? $0.14 (Marginal Cost)

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Marginal Revenue per Copy Marginal Efficiency $ Optimum Distribution Formula

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Marginal Cost per Copy $ Marginal Efficiency Optimum Distribution Formula Marginal Revenue per Copy

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Marginal Loss Breakeven Point $ Marginal Efficiency Optimum Distribution Formula Marginal Profit

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A Lower Cover Price Requires a Higher Efficiency

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A Higher Retailer Discount Requires a Higher Efficiency

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A Higher Publisher Discount Allows a Lower Efficiency

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Higher Operating Costs (Metro) Require a Higher Efficiency

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Disparity Between ANC and Publisher Economics ANC Gross Profit ANC Variable Cost Publisher Gross Profit Publisher Variable Cost

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Disparity Between ANC and Publisher Economics The difference between ANC’s profit maximization point and the publisher’s represents ANC’s leverage

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Variable Costs Distribution$0.11 / Copy Distributed Returns$0.03 / Copy Returned Gross Profit per Copy Sold Discount from Publisher 43% Discount to Retailer-26% Gross Margin% 17% Cover Price $3.50 Gross Margin $3.50 * 17% = $0.60 Motor Trend Optimum Distribution Formula

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Marginal Revenue = Marginal Cost Gross Profit * Efficiency = Distribution Cost + Return Cost * (1-Efficiency) $0.60 * Efficiency = $0.11 + $0.03 * (1-Efficiency) $0.60 Efficiency = $0.11 + $0.03 - $0.03Efficiency $0.63 Efficiency = $0.14 Efficiency = $0.14 / $0.63 Optimum Marginal Efficiency = 22% Motor Trend Optimum Distribution Formula

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Motor Trend 10 Copy Average Accounts

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Motor Trend 10 Copy Average Accounts

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Motor Trend 10 Copy Average Accounts

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Motor Trend Optimum Distribution Formula

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Motor Trend Optimum Distribution Formula

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Motor Trend Net Impact

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