Commercial

Understanding real margins is essential. Transparency of all costs associated with not only receiving a product into your business but also storing, handling and delivering. Plus of course monitoring them.

Too often there is a lack of understanding or knowledge in how to calculate costs and prices, including differences between markup, gross, operating and net margins. 

Discipline with structured pricing not avoids unpleasant surprises at month and year end but also allows sales team to react quickly for quotations, to not be expected to calculate in response to every enquiry but also for customers to self-serve. 

Sales people by definition love selling, or at least they should, and do not like to miss out on an opportunity. Discounting is an easy trap to fall into when given the flexibility however recognising that what may be considered a small discount has a drastic effect on margin is vital. Unstructured price cutting is a downward spiral. 

Does your business recognise what costs have and have not been included in price list and margin calculations? 

Are periodic price adjustments being applied to ensure that margins are keeping pace with overheads and cost increases?