Margin & Markup Overview
Markup or margin is often referred as the difference between the price that you sell your products or inventory to your clients, and a price on which we purchase the goods from our vendors. Typically the difference between the selling price and the buying price is denoted by a markup or margin, and this can be for both goods and services within the SapphireOne inventory mode. These are often expressed as a percentage and a user may elect to vary these prices from time to time.
The price is the difference between the vendor purchase price and the client sale price. This is referred to as the Profit or Gross Profit (GP), on the inventory line item. The Markup will be the total cost incurred by the producer of the goods or services required to cover the purchase cost and all on costs in producing this product for final sale. In this regard creating a Profit will be reflective of the total of both the fixed and variable expenses to manufacture or distribute your inventory or services.
The markup is typically viewed as a fixed amount or as a percentage of your costs including on selling costs this is commonly calculated as the margin or Gross Profit (GP) between the wholesale manufacture cost and the end user purchase price.
Margin and Markup Pricing Comments
The user should be aware that these two functions when executed will alter the pricing on ALL inventory items that are in the list on screen and not just the currently highlighted ones.
If you have 500,000 inventory items in the onscreen list they will all have their prices altered. If the user highlights just the single item then uses the (Command G)Mac (Ctrl G) windows, shortcut to reduce the onscreen list to just the single item in the list onscreen SapphireOne will change the price of just that single item.
Both of these functions may be executed on either a Base or Location Inventory Inquiry. Choose carefully as applying the function incorrectly will alter prices for inventory prices in Inventory locations that were not required.
The Reason for these tools.
Many companies have inventory numbering Hundred thousands or Millions of items. To go through and manually update customer prices would be a tedious and time consuming task. Using this tool, the user is able to select entire sections of their inventory and update the prices simultaneously.
For example, for margins once the first group of inventory items has had their purchase prices updated the user could go back to Master Defaults again, alter the Margin Pricing then select a different group of inventory items and run the procedure again altering the margins for them. This procedure could be repeated for any number of groups of inventory items.
Markup and Margin functionality.
- Base or Location Inventory – Both of these functions may only be executed on all locations by using a Base Inventory Inquiry, or a Location Inventory Inquiry so choose carefully.
- Base Inventory Items- The Margin or Markup will be updated in all Inventory Locations.
- Location Inventory Items – Inventory in the selected Inventory Location will only be updated, All other locations will be left as they are.
- Inventory Selection – This is critical when either of these two Tools are used as SapphireOne will alter the pricing on all inventory items that are in the list on screen and not just the currently highlighted ones. The user will have to filter the list using the normal commands for filtering.
- Margin & Markup Tax or EX-Tax – The Last Cost as used by SapphireOne for the calculation is Ex-Tax. In the pricing area there is a checkbox to tell SapphireOne to include tax in the prices. The user will have to de-select this to view the calculations as ex-tax
- Multiple Execution of the Pricing Tool – If multiple alterations are to be made to pricing within SapphireOne the user is advised when all re-setting of margins is complete to return to Master Defaults a final time. Then delete all margins in Master defaults as entered. If the Update Prices by Markup is accidentally run again SapphireOne will do nothing as there are no margins entered in master defaults that it can use and so will not write to any of the data entry fields for prices.
Update Price by Markup Procedure.
Where Used. Inventory & Job/Projects in both an Inventory Inquiry and an Inventory Locations Inquiry.
When this tool is selected SapphireOne will update all Standard Prices using Pricebook and the last Cost of the item. Note that this will be for Standard Prices only.
When the tool is first selected SapphireOne will display an alert asking the user to confirm the pricing alteration as seen below.
While Locations Inventory is documented above this tool may also be used with a Base Inventory Inquiry. Be careful that you want it applied using a Base Inventory Inquiry as all Location prices will be re-set.
Update Price by Margins Procedure:
SapphireOne has provision for the entry and storing of up to 10 different margins for every Inventory item for Standard through to Floor.
In addition, up to 10 lines are provided for the entry of additional margins on a line by line basis. Any one of these lines from 1 through to 10, may be selected from the Update Margins tool and then written into the customer prices as required. This means that you are able to store specific margins for sales clearances etc without having to re-enter the margins. Select the line that contains the already entered margins.,then use this Update Margins tool to select the line to use.
In utilities mode go to Utilities > Controls > Master defaults > Inventory 2 Page
In the screen shot below note the 10 lines available for the entry of margins. Normally you would use the first line for your standard margins. Then for sales, specials, clearances etc, enter these in on one of the lines from 2 through to 10.
The user has the option of entering anywhere from a single margin, Standard, to all margins from Standard to Floor. In addition each line or row may have margins entered for Sales, Specials on a line or row by row basis and selected as in the list below when required.
For a 50% margin enter in .50 for a 25% margin enter in .25 and so on as seen above.
Price Margin Data entry
- Utilities Mode – From above, enter on a single line the margins that are required then save your data entry and make a note of the line from 1 to 10 as you will need it shortly. The save your margin entries by selecting the Green tick in the main toolbar.
- Base or Location Inventory – Are we applying these margins to all locations from a Base Inventory Inquiry or to specific location?
- Selecting Inventory Items – Next select your inventory items manually, or by the use of filters as provided by SapphireOne. If necessary select Control/Command G to show the selected sub set only on screen.
- Tax or Ex-Tax – Are the prices to be displayed with or without tax!
- Margin Type – Each and every inventory item must be opened and checked on the first page for the Margin Type setting in the Standard Prices area. This is where you select the line of margins that SapphireOne will use when updating the margins for this inventory item. This is currently set as 1.
- Mixing & Matching – It is possible to mix these Margin Types as each Inventory item is set individually but not recommended as it will become easy to make mistakes.
- Writing Margins – Next select the Update Price by Margins from the Tools menu. The alert as seen below will be displayed. Since we have only the single item in the list on screen the alert will declare that there will be an update to 1 records price/s. Take note of this as it will help avoid mistakes.
- Commencing Processing Margins – Select the button to commence re-writing the margins.
- Line selection – SapphireOne first looks at the the inventory item to see what Margin Type or line it is to apply from the Inventory 2 page in master defaults.
- Applying the line – For example, if a Margin Type of 1 is has been entered into the inventory item so SapphireOne reads line 1 of the Price margins setup in the Inventory 2 page of master defaults. If 5 has been entered it will read line 5 in the Inventory 2 page and so on.
- Multiple Margins – While it will read all the way from Standard to Floor margins, it will only write those margins that have a number more than zero. The other margins with zero will be ignored.
- Repeating the Margins Function – If different margins are to be applied return to utilities mode and re-enter the margins into the Inventory 2 page in master defaults and start again.
While Locations Inventory is documented above this tool may also be used with a Base Inventory Inquiry. Be careful that you want it applied using a Base Inventory Inquiry as all Location margin based prices will be re-set by SapphireOne.
Markup and Margin Cheat Sheets.
There is a procedural difference in the way that a Markup is applied compared to a Margin.
- Update Price by Markup – Very straight forward as follows.
- Base or Location – Select base inventory if the markup is to be written to all Inventory locations or select a specific Inventory location.
- Select Inventory – Select the inventory required then select Control/Command G to only have the required inventory in the list on screen.
- Update alert – From this initial alert screen select yes and a second alert will be displayed.
- Markup % -Enter the markup as a number without the % symbol and select OK.
- Processing – SapphireOne will now apply the entered markup to the selected inventory items.
- Update Price by Margins – SapphireOne has provision for up to 10 margins from Standard to Floor price to be entered and used. In addition there are 10 lines where margins are entered. These settings in Utilities > Master Defaults > Inventory2 are used to drive the Update Price by Margins tool.
- Utilities Mode – Go to Inventory 2 page in master defaults.
- Margin Data Entry – Enter in the margins on each line as required taking note of the Margin Type for each line from 1 to 10. Save the Inventory 2 page by selecting the Save icon.
- Inventory Mode – Select as follows.
- Location or Base – Select Base or Location Inventory Inquiry as required.
- Inventory Selection – Select the Inventory being aware that ALL inventory items in the list both on and off screen will be updated.
- Checking Inventory Items – On the first page of an inventory item there is a Standard Prices area.
- Tax or Ex-Tax – Use the checkbox to determine of the prices are to be displayed with or without tax.
- Margin Type – For each Inventory item in the Standard Prices area, enter in a line number for the Margin Type.
- Update Margins – Select the tool and a confirmation alert will be displayed.
- Take note of it as it will display the number of inventory items that are about to have their margins updated.
- Processing – Select the button to write the new margins into the selected inventory items.