How does Endless calculate gross margin and contribution margin for a product?
Gross margin is the product’s MSRP minus its cost, divided by the MSRP. Contribution margin is a per-channel calculator on the product that you fill in yourself. Both are on the product’s Pricing & Costs tab.
The Profitability card shows:
- Gross Profit: MSRP minus cost.
- Gross Margin: Gross Profit divided by MSRP.
The cost is the Default Landed Cost. When the landed cost is blank or zero, Endless uses the Default Unit Cost. Both are blank until the product has an MSRP and one of those costs above zero. Customer and channel prices do not change gross margin.
The “Contribution Margin by Sales Channel” card compares what one unit earns per channel. Select “Add channel” to add a column. Endless fills Retail Price and Retailer’s Margin from that channel’s prices, or uses the MSRP, and you enter the rest. The figures are not saved.
The rows are:
- Retail Price: the price the end customer pays.
- Retailer’s Margin: the retailer’s share of the retail price. Gross Sales Price is the retail price minus that share.
- Marketplace Fee: a percentage of the retail price. Retailer Allowances: a percentage of the gross sales price.
- Net Sales Price: gross sales price minus the fee and allowances.
- Landed Cost: the product’s Default Landed Cost, or zero when it is blank.
- Gross Margin: net sales price minus landed cost.
- Freight to Customer, Fulfillment Cost, Inbound Cost, and Storage Cost: per-unit amounts. Delivered Margin is gross margin minus these.
- Ad Spend: a percentage of the gross sales price. Contribution Margin is delivered margin minus ad spend.
- CMROI: contribution margin divided by landed cost.
Gross Margin and Delivered Margin percentages are of the gross sales price. The Contribution Margin percentage is of the retail price. The channel type turns off fields that do not apply, such as Retailer’s Margin for Ecommerce.