There are many formulas for calculating gross profit margin, mainly including the following:
Gross profit = ∑ (single product operating income-single product operating cost) (formula 1)
= ∑ (single product sales × single product gross profit margin) (Formula 2)
= ∑ (single product sales × single product gross profit) (Formula 3)
These include:
Gross profit margin of single product = (unit selling price-unit cost)/selling price
Although the results of the above two formulas are consistent, as far as management is concerned, they have different results in guiding the value of action.
Equation 2 pursues:
1, pursuing the maximization of single product price;
2. Pursue the gross profit of a single product without paying attention to its gross profit level.
Formula one racing pursuit:
1, customers consume high-priced products and let customers spend as much money as possible.
2. The gross profit margin of products consumed by customers is the highest, that is, the price difference accounts for the largest proportion of income, not just the price difference.
Formula 3 pursuit:
1. Customers consume as many items as possible.
2. The gross profit of single product consumed by customers is the largest.
Obviously, the goals pursued by Formulas 2 and 3 and our goal of maximizing profits are not feasible in practical application, because:
1, the number of products consumed by customers is generally about 0.5 times that of the number of people eating, which is not in line with the increasingly recognized concept of "no waste" and is limited by reality.
2. Maximizing the absolute gross profit of a single product will mislead us to choose products with high unit price but low gross profit rate, thus affecting the overall gross profit level. For example, the gross profit of sales in 50 yuan is 30 yuan, which is more in line with our interests than the price of 100 yuan in 40 yuan. Because the customer's second consumption habit is to have a basic budget for the total consumption price before consumption, there is generally not much room for upward floating, unless there are very attractive products and the amount of consumption is decided, there may be greater fluctuations, generally not much.
Special reminder: Don't use the common formula "gross profit = ∑ (single product sales × single product gross profit)" as the theoretical basis for thinking and decision-making, which will mislead our decision-making and be a trap.