[Company Name]

Special-Order Pricing
[Date]

Gray cells are calculated for you. You do not need to enter anything in them. [Company Name] CONFIDENTIAL

Product name Widget

Customer name Northwind Traders
Salesperson name Robert O'Hara
Order number 1500
Time frame of order (< 1 year considered special order) 6 months

Order information and financial analysis

Incremental revenue
Customer bid price per unit $25.00
Volume (units) requested 100,000

Incremental costs
Direct material cost per unit $10.00
Direct labor cost per unit $15.00
Variable overhead cost per unit $1.50

Total incremental revenue $2,500,000

Less total incremental costs $2,650,000
Net benefit (cost) of order ($150,000)

Strategic considerations
If we accept this bid, could our regular customers start to demand a lower price? Yes
If line 30 is Yes, what is the probability of regular customers demanding a lower price? 10%
If line 30 is Yes, can we quantify the impact? Yes
If line 32 is Yes, what is the potential long-term impact on revenue (not probability weighted)? $250,000
Expected long-term impact (probability weighted) $25,000

Subjective considerations
If we accept this bid, will there be dilution of brand equity? Yes
[Add other subjective consideration.] No
[Add other subjective consideration.] No

Recommendation (based on quantifiable inputs)

Net impact on operating margin ($175,000)
Initial recommendation Reject or Renegotiate
If line 43 is Reject or Renegotiate, what price would be acceptable? $26.75
Is additional management discussion warranted regarding subjective considerations? Yes