Profit margins

When discounts are applied to order lines or order totals, users can benefit from understanding the profit margin for the applicable order line or order total.

For example, if a Field Sales Representative sees that the profit margin for an order line is too low, that Representative may decide to adjust the percentage discount applied to that order line. Also, an approver may look at the profit margin of an order total to determine whether or not to approve a quote.

Profit margins are calculated as follows:

• Order line:

  
  ROUND(((Total - Item.UnitCost*Qty)/Total)*100, 2)
  

  Note: Total represents the extended price of the line, which is the unit price multiplied by the quantity, plus or minus any charges or discounts considered for profit margin.
• Order total:

  
  ROUND(((Total - SUM(Item.UnitCost*Qty))/Total)*100, 2)
  

  Note: Total represents the extended price of the order, which is the sum of the unit prices multiplied by their quantities, plus or minus the sum of any charges or discounts considered for profit margin.

A flag in the charge category table and the charge name table determines if the applicable charge or discount in an order, such as shipping charge or manual discount, should be included when determining the profit margin. By default, all charge categories are included when determining the profit margin. If a charge name does not have a value, its value will be inherited by its charge category.

For example, the following table shows the calculated profit margin for two items, Phone and Tape Recorder, in an order:

The profit margin for the order total is 25.17%, which is calculated as follows:

Total:

$220.50

Total Item Cost:

$165.00

Order Profit Margin

(220.5 - 165.00)/(2.205) = 25.17%