Finding the maximum amount of profit you can generate from one unit of a product is called Margin Potential. This is useful for a company when making a decision about whether to go into production or not. In its simplest form, you can calculate Margin Potential as: Margin Potential = Maximum Price - Minimum Unit Costs

Use the information table below to find the maximum price that customers deem acceptable.

Trailing Edge Material Cost Leading Edge Material Cost Lowest Acceptable MTBF Maximum Price Automation Level (out of 10)
Traditional $3.80 $7.80 14,000 $30.00 8.0
Low End $1.00 $5.00 12,000 $25.00 10.0
High End $6.00 $10.00 20,000 $40.00 5.0
Performance $4.50 $8.50 22,000 $35.00 6.0
Size $4.50 $8.50 16,000 $35.00 6.0