Profit estimation

<< Prev   Next >>

When preparing a sales order, a sales manager often faces two common questions:

• How much profit is expected from this sale?
• At what price should I sell in order to reach a specific profit margin?

In 1C:Drive, profit estimation tool answers both of these questions quickly and easily. With it, you can view the potential profit of a sales order, or set the sale prices that guarantee a reasonable profit, before making the final offer.

To estimate the profit for a sales order, 1C:Drive analyzes all items (both products and services) included in the order, their quantities, prices, taxes, and discounts, as well as the cost of each item.

To open the profit estimation tool for a sales order:

1. Open the sales order.
2. Click Profit estimation.

In the profit estimation tool, you can:

• View expected profit.
• Calculate recommended sale prices.
• Set COGS calculation methods for products sold.
• View replenishment processes for products sold.
• Add products and expenses to profit estimation.
• Manage profit estimation templates.
• Apply discounts.
• Temporarily hide cost and profit data.
• Save profit estimation results for further use.

For a detailed description of all fields of profit estimation, see Profit estimation fields.

Viewing expected profit

The profit estimation tool automatically analyzes all financial factors related to a sales order—product manufacturing costs, purchase costs, taxes, discounts, sale prices, and more—and calculates the expected profit of a sales order based on this data.

To view expected profit for a sales order:

1. Open the sales order.
2. Click Profit estimation.

The Profit column in the product list will display expected profit amounts for each product included in the order.

The Profit field at the bottom will display total expected profit amount for the entire order.

Calculating recommended sale prices

The profit estimation tool can calculate the sale prices that are required to reach a specific profit margin.

To calculate the recommended sale prices for a sales order:

1. Open the sales order.
2. Click Profit estimation.
3. Specify a target parameter (Margin %, Markup %, Amount, or Profit) for the entire sales order or for a specific product in it.
   To learn more about these parameters, see Profit estimation fields.

The Price column in the product list will display recommended prices at which you should sell each product in order to reach the target parameter.

Managing COGS calculation methods

Profit estimation is only possible when you know how much it does cost for your company to manufacture or purchase each product in the sales order.

To ensure correct cost calculation for each product, a variety of COGS (cost of goods sold) calculation methods are available.

You can separately specify a COGS calculation method for purchased or manufactured products, and for subcontracting services.

If you require an even finer distinction, you can separately specify a COGS calculation method for each product. To do this, click Settings and set COGS calculation method position to In tabular section. Now, you can double-click a product name and then specify COGS calculation methods for specific production operations.

The following COGS calculation methods are available:

• Latest purchase price. Read the product's latest purchase prices from supplier invoices.
• Supplier's price list. Read the product's latest prices from a specific supplier's price list.
• Purchase price and landed costs. Read the product's latest purchase prices from supplier invoices and landed cost documents.

  This method is not applicable to subcontracting services.

• Price list (price list name). Read the product's latest prices from a specific price list, like "Retail price", "Accounting price", or "Wholesale price".

  This method is not applicable to subcontracting services.

Viewing replenishment processes

In profit estimation, you can view replenishment process for a specific product in the sales order.

To view the replenishment process for a product, do one of the following:

• Double-click the product name.
• In profit estimation header, click Show details by and select the product from the dropdown list.

In the replenishment process window, you can view the entire chain of manufacturing operations leading to the final product, including costs and amounts of components consumed during each operation.

Note that you can edit operations that have replenishment method set to Production or Subcontracting. You can switch each such operation between Production and Subcontracting if necessary.

To close the product view and return to the main profit estimation window, click Show details by and select Entire order.

Adding products and expenses

To make profit estimation more precise, you might want to specify extra products that are related to the sale but not included in the sales order. For example, goods you offer to the customer for free, or packing materials consumed in delivery.

To add a product or a service to the profit estimation:

1. Click Add product as cost and select the item.
2. Specify the item quantity, unit of measure (UOM), and cost.

You also can add any extra expenses, such as assembly and delivery costs, or sales manager's bonus.

To add an expense to the profit estimation:

1. Click Add cost and select the expense.
2. Specify the expense cost.

In the Profit estimation comment field, you can provide a description that explains why you added a product or an expense. This will serve as a reminder about the specifics and circumstances of the sales order to you and your co-workers.

Managing profit estimation templates

If you often need to add a specific set of products and expenses to profit estimation of sales orders, you might want to save these products and expenses to a template, which can then be applied to any profit estimation in a single click.

To create a template:

1. Click Apply template.
2. Click Create.
3. In the Description field, enter the template name.
4. Do any of the following:
   • To add a product, go to the Inventory tab, click Add, select the product, and then specify the quantity, unit of measure (UOM), and cost.
   • To add an expense, go to the Expenses tab, click Add, select the expense type, and then specify the expense item, calculation method, and value.
5. Click Save.

To apply a template to a profit estimation:

1. Click Apply template.
2. Select the template and click Select.

You can apply multiple templates to a profit estimation.

Applying discounts

You can apply discounts to individual items or to the entire order. You can enter a discount as a percentage or an absolute value.

Entering a discount automatically recalculates profit estimation results.

In the Profit estimation comment field, you can provide a description that explains why you added a discount. This will serve as a reminder about the specifics and circumstances of the sales order to you and your co-workers.

Hiding costs and profit data

By default, a profit estimation displays the sales amount, costs, profit, and COGS calculation method for the sales order.

To hide the costs, profit, and COGS calculation method:

• Click the Show/hide COGS and profit button .

To show the costs, profit, and COGS calculation method:

• Click the Show/hide COGS and profit button .

For instance, if you are a sales manager and you are communicating with a customer who is by your shoulder at the moment, you prepare a modified order, probably apply discounts in the profit estimation tool, check that the order is profitable enough, click the Show/hide COGS and profit button , and then show it to the customer for their approval. The customer can see the ordered items, their quantity, prices, discounts, and the payment amount. However, they do not see how much you are to spend and earn on the order. When the customer is no longer looking at your screen, you can click the Show/hide COGS and profit button to display the costs and profit again.

Saving profit estimation results

To save the changes you made to the profit estimation, click Save and close.

The next time you open the profit estimation for this sales order, you will continue where you left off. COGS calculation methods, products, prices, discounts, and all other details will be exactly the same, provided you made no changes to the sales order.

Profit estimation fields

To learn more about the product list fields of a profit estimation, see the following table:

<< Prev   Next >>