R0ML's Ratio is a methodology designed for evaluating the value of volume purchases by comparing the Full Undiscounted Retail List Price of Units Used (FURLPoUU) to the Total Price of the Entire Enterprise Volume Licensing Agreement (TPotEEVLA). For an example involving 10,000 clown noses priced at $100 each, the FURLPoUU amounts to $1,000,000. If a vendor offers a discount to $500,000, the analysis through R0ML's Ratio indicates substantial savings on the purchase, validating the negotiation outcome as advantageous.
In order to evaluate the value of a volume purchase, use R0ML's Ratio (RR) which compares the Full Undiscounted Retail List Price of Units Used (FURLPoUU) against the Total Price of the Entire Enterprise Volume Licensing Agreement (TPotEEVLA). For instance, purchasing 10,000 clown noses at a negotiated price of $500,000 represents significant savings from the retail value of $1,000,000, suggesting the deal is favorable when evaluated through RR.
The methodology for evaluating volume purchases serves as a practical tool. It involves calculating the FURLPoUU by taking the individual retail price of $100 for each clown nose and multiplying it by the total units, resulting in the total retail value of the required clown noses, which is $1,000,000.
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