Introduction to this document

Sales mix calculator

Whether your company sells products or provides services, your sales are unlikely to be comprised of a single line. It’s more likely that the company sells a range of products or services and it’s equally likely that the gross profit margins achieved differ across the range. For a new product range, an early analysis of the sales mix will enable pricing to be adjusted before launch so that gross margins can be maximised.

Margins, volumes and mix

Use our Sales Mix Calculator to record the potential impact of existing and new product lines on gross profit.

Sales margins. Start your analysis by calculating the gross profit margins achieved or projected on each product or service in your range. Obviously, don’t confuse gross profit margins with mark-ups.

Sales volumes. The full range of products or services sold by your company is likely to have different sales volumes as well as differing gross profit margins. The next step in your analysis is to estimate the volume of sales of each product line. For existing products, you’ll have access to budgeted sales projections and be able to carry out a “does it make sense?” check off these against the actual sales achieved in past years. For the new product range, there is no historical data so you’ll need to base your analysis on projections. Ensure that you use scenarios for low, likely and high sales levels.

Mix. Sales mix is the proportion of sales from each product or service line. The impact on the sales mix of the introduction of the new product range will impact the company’s overall profitability. Naturally, total sales and gross profit margins for the company can be enhanced by selling a higher proportion of items with the highest gross margins.

 

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sales mix calculator

02 Jan 2013
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