Companies wanting to know profitability of units after variable costs
Understand how changes in costs and volume affect profit
Contribution margin (CM) is useful for seeing profitability for specific products or product groups. You can more easily understand the impact if you increase/decrease purchase costs such as:
- volume of production
- % of discounts and commissions
- costs of overheads
How to use:
Choose sales modelGo to Settings>Account settings, and click Contribution margin (CM) as your sales model:
Choose whether to display CM by default, or click to show actual order value (you'll still be able to see CM).
Set targetsClick Goals then Contribution margin target (this only appears after you've chosen CM as your sales model in Step 1):
You can now set contribution targets for each of your users:
The progress bar (desktop users – it's on the top-right of your screen) shows how close you are to reaching your CM targets at all times:
Click this progress bar to see performance breakdown – by month, quarter or year:
Know CM for each unitGo to Settings>CRM>Products. Add a new product, or edit an existing product. Click the "Purchased at cost" tab to add the cost.
MeasureGo to your sales board. You can now click to view sales performance by CM or actual value:
Within your deals and opportunities, you can see the impact of purchase cost on your CM and your sales, subscriptions or opportunities. Try changing the amount or discount. Upsales automatically updates your net amount.
You can also quickly change the purchased cost for individual orders, without having to change the default purchased costs. This works across your reports, such as targets, opportunities, and contacts:
ResultsKnowing the profit per unit means you see which product lines units are profitable. You can more accurately model "What-if" scenarios for strategies. Plus you can measure performance per user – not just for sales but also profit.