Price Compression
How far can buyer price fall before the deal fails?
Phase XXXIV / First Numerical Model
Put numbers
under pressure.
Illustrative economics for a premium private-label card-holder transaction. These figures are modelling assumptions, not quotations or forecasts.
Model basis
1,000 units.
Three scenarios.
The purpose is to reveal sensitivity: which variables actually determine whether a transaction deserves capital and management attention.
Illustrative unit economics / USD
CONSERVATIVE
$18.00
Buyer price per unit
Factory: $8.50
Other attributable cost: $3.50
Contribution: $6.00
BASE CASE
$20.00
Buyer price per unit
Factory: $8.00
Other attributable cost: $3.00
Contribution: $9.00
STRONG CASE
$23.00
Buyer price per unit
Factory: $7.50
Other attributable cost: $2.75
Contribution: $12.75
Illustrative 1,000-unit transaction
BASE REVENUE$20,000
1,000 × illustrative $20 net price.
BASE COST$11,000
Factory plus attributable transaction costs.
CONTRIBUTION$9,000
Before Luxophy overhead and tax.
BUYER DEPOSIT50%
Illustrative payment structure.
SUPPLIER DEPOSIT30%
Illustrative production structure.
CAPITAL GAPMODELLED
Timing—not headline cost—determines peak exposure.
Sensitivity questions
STRESS
Cost Inflation
What happens if factory cost rises?
Freight Shock
Can logistics volatility be absorbed?
Payment Delay
How long can cash remain tied up?
Quality Failure
What reserve is required for remediation?
Phase XXXIV conclusion
THE NUMBERS ARE
NOT THE ANSWER YET.
They identify the questions that real RFQs, buyer discussions and payment terms must answer. The next model replaces illustrative inputs with a live acquisition process.