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Estimate the margin hit after passing part of a supplier increase

  • For FP&A and financial analysts
  • You practice Catching mistakes and made-up facts
  • Time about 5 minutes
  • Level Intermediate

About this exercise

You're sizing the margin effect of a supplier price increase. Write a prompt for plain text with lines starting "Cost increase:", "Pass-through:", "Net margin hit:" and "Per-month net hit:", each with the math. Pass-through is the share recovered by raising customer prices, as set in the pricing plan. Don't mention the sales team's belief that customers will accept more. Under 70 words. No bullets or numbering.

Common mistakes when you ask AI for this

  • Recovering 100%. The AI follows sales and shows no margin hit. Try: Add: "Use the approved 50% pass-through; do not mention sales' belief."
  • Wrong base for the increase. The AI applies 6% to revenue. Try: Say: "Cost increase = annual supplier spend x 6%."
  • No monthly line. The AI stops at the annual hit. Try: Add: "Per-month net hit = net margin hit / 12."
  • Markdown extras. The AI adds bold labels, headings and a closing note. Try: Say: "Plain text, no bold. Output only the lines asked for."
  • Trusting the AI to count words. AI is bad at counting and runs past word limits. Try: Ask for fewer words than the real cap and keep each line short.

What a strong prompt includes

  • Names the four lines
  • Uses the 50% plan
  • Gives the monthly division
  • Bans the sales view
  • Caps length

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