Title Delivering the lowest B2C monthly price and highest value proposition to Merchant. Introduction

Input values

Now let's add some values to the calculation base data.

Retail price of the Macbook - 1500 €

Retail price of the Warranty - 300 €

MacBook’s Renewal period - 36 months

Default Subscription period for a single product - 48 months

Financing cost interest rate - 12%

Merchant commission - 1%
VAT rate - 20%

Calculations

So now, let's head to the calculations. Bear in mind that it will require some focus.

Calculations are done in a sequence and will be done in the following order:

1. 
   Subscription service rate;
   
2. 
   The residual value of products;
   
3. 
   Estimated subscription amounts and monthly payments of the products;
   
4. 
   Approximate monthly payment and subscription period of the bundle;
   
5. 
   Concluding calculations:
   
   1. 
      Subscription period;
      
   2. 
      Total monthly payment;
      
   3. 
      Subscription amount;
      
   4. 
      Subscription service cost;
      
   5. 
      VAT of the subscription service cost.
      
      

Now let’s have a closer look at each calculation.

Subscription Service rate

The first thing we need to know is the Subscription Service rate. This is the base rate that is used for calculating the Subscription Service Cost.

This is calculated by using the following formula:

Subscription service rate + merchant commission

When we use the numbers mentioned before, we get the following:

Subscription service rate + merchant commission = 13% + 1% = 14%

If this is done, then the VAT rate must also be added.

Now let's also add 19% VAT: 14% / (1-0.19) = 17,28%

So subscription service rate with VAT is 17.28%