Gross margin

The trading range (also margin or short range ) is commercially available, the difference between ( net ) sales price and purchase price of the product, expressed as a percentage of the sales price. Since the purchase price of a commodity, that is, the order discounts and / or surcharges corrected shopping or invoice price is not always accurately known (for example due later granted bonuses or total sales discounts or due to lack of items accurate accountability of discounts or transport costs), being an alternative to fall back on the purchase price: trading range as the difference between the sale and purchase price.

As realized trading range (actual range, discount margin or discount rate ) it represents the payment for the services provided by trade performance dar. As a not yet realized, planned margin (target range, premium margin ), it represents the mark-up rate of the calculation dar. In for Pricing should the planned gross margin or premium margin in principle cover their share of action costs and make a profit contribution. As in commercial practice under margin often the impact range is meant, while in theory, but also in empirical analyzes trading range the discount margin is meant misunderstandings can arise. Ever is mounted in the use of concrete span information attention, such as the occasional complaint made " excessive" margins. Neither is there a normal range as a criterion still leave the percentages recognize the underlying absolute sizes. If for example a box of matches bought at the purchase price of 0.03 Euros and calculated with the " immense " impact margin of 100 %, then falls in the case of a sale to a gross profit of 0.06 euros.

The difference between sales and cost price or purchase price can therefore be expressed in two ways: as an absolute amount ( absolute range, amount range, gross ) and - in the sense of the definition - as a relative percentage ( relative margin, percent margin ). The latter can in turn serve as margin ( the cost price ) or discount margin indicate ( the sale price ).

Example:

When calculating an imputed dividend is to be considered, consisting of

• The imputed imputed wage (for the labor input of the owner of capital ),
• The imputed interest ( for operating capital ) and possibly
• The imputed risk premium ( for the riskier investment of capital employed in the company rather than bank deposit )

The determined fee margin is only a minimum or benchmark for pricing. Does it demand to be trying to realize a higher profit margin ( absorption strategy ). Does not the market, such as due to lower competitive prices or declining demand, a realization of the planned gross margin, a conscious Unterbietungsstrategie is sought ( in extreme cases, " predatory pricing " ) or is an planned, the sale price must be lowered, possibly below its cost. The associated weakening the gross profit must be compensated as on savings in handling cost or a higher inventory turnover. A reduction of individual action costs, such as personnel costs, does not automatically lead to an improvement in operating earnings, but only tends to improve the profit share at the margin of the article.

The determination of sales prices by a uniform margin for all products ( unit costing) simplifies Although the calculation, but contradicts the business requirement to apply a differentiated calculation ( mixed calculation with different premium rates depending on value of goods, inventory turnover and market opportunities ). The commercial art of the optimal price destiny lies precisely in the application of the mixed calculation, ie the fact across the range products with average, industry-standard margin products with below-average margins (compensation taker ) and those with above-average margins ( balance beam ) optimally mix to.

Margins can ( ex ante ) in the calculation and in the ascertainment of (ex post) be based on arbitrary objects, such as a single piece of margin or average grades, article, commodity groups, department, branch or operating margin. Profits as the excess of all revenues over all costs can only be determined ex post and only for the entire company in the trade. Unlike margins, however, can not be determined earnings per piece, variety, products or other parts of range; because an objective and precise timing, causation attribution of all cost components to the respective range is not possible. At most, is for greater range parts, the calculation of profit margins possible, and by deducting proportionate action costs from the corresponding margin. With Schenk is also to point out that in neither trade between profit (operating result) and (operating) profit margin, there is still a correlation between profit and handling costs. The misleading term " profit margin " ( for trade margin ) must be avoided!

For the commercial management, especially for the trading controlling, is the permanent monitoring of all trade margins or gross profits as a measure of tactical retail marketing of utmost importance. The temporal and spatial ( intra - and inter-company ) comparison of margins and especially of margin -related metrics that by linking trade margins with cost and / or income -related variables (personnel, space utilization, inventory turnover, interest charges, bonuses, etc. ) are formed, gives the modern trade management an excellent management tool at hand. For example, the recorded in ERP system margins and inventory turnover can be combined for each variety to a code. This in turn can be linked to other data, such as the staff working hours or the utilized presentation area. Such refined management performance indicators can be listed in ranking and can serve as a valuable basis for decision making, such as for the purchase of goods for the calculation for area allocation and placement for special offers, under certain circumstances, for a delisting.