How to easily identify gross margin on every sale, every day

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7 Reasons why you should consider Business Reporting Software

Calculate profits accurately with easy access to data, not guesswork

Do you know the profit you are making on every single sale?  A really obvious question, but in our experience one that’s often overlooked because, unless you have access to business intelligence software, it’s just too difficult to get to the data you need to be sure of the answer.

If you aren’t monitoring the actual profit you make from every customer then in reality, you only have gut feel and patchy evidence to rely on to be sure you are selling at the right price. In tough trading conditions, that’s far from ideal. What you really need is precise and accurate data, presented in the right way every time, when you need it. With no fuss or skill needed.

Overcome the challenge of accessing reports from your ERP

Chances are, your accounts system isn’t as helpful as you would like it to be. In all probability, it will only calculate the profit on total, not individual, sales. But you need to get to this information. If you don’t, you can’t know if you are charging enough to cover costs and make a good profit.

Gross Margin

Calculating gross profit made on each sale can be done by spreadsheet but it’s such a slow and laborious process that most businesses just don’t do it. Octelas business intelligence software will give you this information automatically.

Track gross profit margins per product type & per customer

Once you know your gross profit, you are able to set the minimum gross margin (ie the minimum amount of profit you need to make on every sale as a percentage of the total price). Many businesses will set a range (say 15 – 20%) which they will expect to make on any sale. But typically they only get to check the average gross margin made on, say, monthly or quarterly sales.

Critically, if some areas of your business are substantially more successful than others, then relying on average gross margin risks masking significant under-performance in those weaker areas

Octelas business intelligence software will give you this critical detail on every sale, allowing you to track performance in every area of your business day by day, month by month. By rigorously tracking actual against budgeted profits, you can make adjustments to your costs and your pricing policy as you are going along.

Use gross margin data to give you insight into trending sale patterns

Once you have the data, gross margin can be used in a variety of ways to create valuable insights.

Using “loss leaders”

You may have decided to sell certain goods as “loss leaders”, as a strategy to persuade customers to buy additional lines. But this only makes sense if it drives additional sales. You also need to know exactly how much profit you are willing to sacrifice in reduced pricing during the campaign.

Maximise profit per sale

Once you know the gross margin for each sale, you can use the data to test different pricing strategies. You are looking for the selling price which will give you maximum sales volume for greatest profit on each product or service line.

Slice and dice to find best sellers

By looking at gross margin earned on each group of products or service you can quickly identify your most profitable lines and vice versa. Your sales efforts can then be directed to those goods and services.

Some customers cost you money

By identifying the gross margin on each sale you will often discover customers who are giving you very little profit or are even loss-making. This gives you the option to stop supplying or negotiate fresh terms.

Margin on sales

Geography matters

Often, certain products perform better in particular geographical areas or with specific types of buyer. Once you have the data, you can investigate what’s behind the differential. Is it due to local market conditions (which probably you can do little to affect) or to more effective sales practices in your best performing territories?

If your sales team in any given area is out-performing the rest, maybe it’s the way they are working which is making the difference. If so then Octelas business intelligence software will search out for you the factors at play giving you the opportunity to replicate best practice across the whole business

How do you choose a business intelligence system for your business?

With lots of business intelligence software on the market, how do you choose what’s right for your business?

For example, dashboard products are great for giving an overview of your stock position, but typically they won’t allow you to slice and dice the data behind to establish exactly why something has occurred.

Self-service business intelligence software is essential for SMEs

Even if you have little or no expertise in data, you will want to be able to challenge the data for yourself – quickly and easily – without relying on someone else in the business to do it for you! To achieve this, you need to ensure the software is self-service and easy to use.

Your own data analyst on tap whenever needed!

In our experience, it is only when you are able to see your data in the round – via business intelligence software – that you can fully appreciate the breadth and scope of the information available to you. This means it’s very unlikely that you will be in a position to immediately list all of the reports of value to you. The full possibilities will only become clear to you over time. Almost certainly during this period – and after – you will appreciate the ability to take advice. That’s a specialist job for an experienced data analyst.

At Illuminis we have many years experience in helping SMEs get the most out of our Octelas business intelligence software.

When you work with us, you don’t just get excellent, easy to use software, you also get your own dedicated data analyst who will be by your side throughout. Free of charge.

At Illuminis, we understand the data needs of SMEs. We have helped them access and manage their data for many years.

We know that there is very little advice available to the average SME business on how to use its business data to increase profits and grow.

So we designed Octelas business reporting software especially for SMEs: it is simple to use; cost effective and installed in just a couple of days. Typical return on investment is 6 months and the monthly access fee includes access to our team of data analysts. Think of it as having your own, in-house data analyst on tap at all times to help you get to the exact reports you need, in one click. 

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