How to Calculate Profit Margin in Derma Range Products For Franchise

Derma range of business is quite profitable. Starting pharma franchise in this range is quite profitable. But how much profitable? Well, there is no sure shot answer to that, but one must know how tho calculate the profit margin. Now if you are wondering how to calculate it, we will take you through the method of calculation.

Calculation of Profit Margin

Realize the technique to figure the product net revenue. When you comprehend it in mathematical structure, it gets simpler for you to analyze the spendings. You will know the area of improvement and in this way, you can achieve great profit. Understandings economics is important for the business. The following is the strategy to ascertain the profit margin. Ensure that you follow these methods carefully. It applies to all kind of pharma franchise business.
  • First of all, you need to find the Total Cost. Total cost is the total amount you paid in bringing the products to your warehouse and maintaining it safe and intact. You need to consider investment, taxes, transportation cost, labour cost, maintenance cost, etc. This will make the formula for the total cost as:
TC (Total Cost) = CP (Cost Price) + T (Taxes) + TrC (Transportation Charges) + LC (Labor Cost) + M (Maintenance)
  • Now add the marketing Cost to the Total Cost. Now the amount you spent will be TC + Marketing Cost.
  • In this step, you have to calculate how much margin you have made. It is very easy. Just minus the TC and marketing cost from the Selling Price (SP). So the formula for margin will be
Margin = SP - TC - Marketing Cost
Mind that this not the profit margin.
  • If you have to take out the discounts, or commission given to customers or retailers respectively. Now what remains is Total Profit. By calculating the profit by the above method, you will have great insight into where the money is being spent and area to improve.
  • The formula for Profit Margin percentage is = (Net Profit/Selling Price)*100.

Factors that Can Affect your Profit Margin

There are several things you should know about. Factors which might change the profit margin you are getting. The final cost, i.e selling price is limited, as it is set by the company. All you can do is to manipulate the cost from your end. This includes commission or discount or other things. But there is a larger picture. Below are the affecting factors.
  • Demand affects your overall business. If demand is high, then your overall profit will be quite good even though your margin is low.
  • Study about the tax policy in your region. In this way, you will know if any tax concession exists which you can avail.
  • It will be quite easy to negotiate with retailers if you are the only supplier to the market. You must choose some unique products for the franchise business to maximize profit margin.
  • Choose a company with high-profit margin but also with a good reputation. Find the company with balanced margin and reputation. Generally, high reputation company doesn't provide an expected profit margin.

Swisschem Dermacare - Leading Dema Company

Swisschem Dermacare has always standout amongst other derma companies. We are known for providing the best products to the franchise partners at the best profit margin. Our products are reliable, effective and durable. These are all DCGI approved products. Swisschem Dermacare is certified by ISO 9001:2008. Our overall business is based on our positive ethics and trust to the customers.
Contact Us
Swisschem Dermacare (A Division of Swastik Lifesciences)
Address: Plot no. 295, Industrial Area, phase-2, Panchkula
Contact Us on 0172-5264105, +91-9805523671, +91-9501957971
Email us at skginternationals@gmail.com, swastiklifesciences@gmail.com

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