HOW TO CALCULATEYOUR PRODUCT ROFITABILITY:-
Product profitability is used to let your company know how profitable a certain productis. You can figure product profitability by multiplying the unit sales volume by the profitmargin of the product. The result will give you the overall profit for the product but tofind its direct product profitability (how much the product makes compared to how muchself space it uses) you need to divide the overall profit by the shelf space that it uses. For ex- if your profit for the product is $2000 and you use 100 cm of shelf space your direct product profitability is $20/cm. while this doesn’t seems that hard to do product profitability can get more complicated if you sell numerous products and it can getcomplex because of all of the different costs that associated with the product, etc.Because of many businesses are using product profitability to determine if they shouldcontinue using a product or to help determine what their better products are, computer software has been created to help you determine product profitability.
WHAT THE SOFTWARE INCLUDES:
Accurately determine product cost and profitability in environments likemanufacturing, distribution, retail and many other types of businesses.
Platform for thee assignment of all related direct, indirect and activity based coststo products, channels, regions and customers.
Provides analysis to let you know which products are profitable and why
Scenario modeling that allows you test out new prices, processes and services before you actually launch the product.
The software also allows you to print a variety of reports. The reports that can be printed with this software are:
Profit and loss statement by product and overall
Product ratings for your executive staffs use
Operational cost report so you can make improvements as needed
Improvements in Corporate Profitability-
Computer software offers product profitability management solutions that will createhuge improvements in your company’s profitability by allowing for more accurate pricing, improved inventory performance( no more cold inventory hanging around for months on end) , perfect product mix and a more effective market planning for your company too follow.