Calculating marginality has its advantages and disadvantages. Let's start with the advantages:
transparency. You can calculate the gross margin using a calculator, knowing the amount of revenue and the cost of goods sold for a certain period;
gain insight into pricing. Gross margin will tell you which products are the most profitable so you can sell them more actively;
business efficiency assessment. By comparing profitability with competitors' indicators, you can evaluate the results of work and find new growth points;
the ability to save data and analyze it further. The marginality bolivia cell phone number list percentage can be easily entered into an Excel or Google Sheets table and then used to analyze the company's work for different periods.
Flaws:
the indicator does not take into account routine expenses. For the calculation, they use profit and cost of products, but do not take into account the costs of advertising, rent of premises, etc. But they also significantly affect the efficiency of the business;
wide range. The ideal marginality value depends on the industry, the specifics of the company's work, and the business processes taking place in it. Since there is no universal coefficient, it is difficult to compare yourself with competitors;
other KPIs are not taken into account. Gross marginality is an independent indicator, but to get a more accurate picture, other company performance results need to be taken into account.
How to increase marginality
There are several ways to do this.
Reduce manufacturing costs where possible. Don't reduce manufacturing costs at the expense of product quality, as this may alienate customers.
Increase sales. To do this, you need to develop a marketing strategy and improve the work of managers. If the sales volume increases, then the marginality will increase, since the costs will be distributed over a larger number of units of goods.