How to use the Gross Margin Ready Reckoner
What does this tool do?
The Gross Margin Ready Reckoner is a business planning tool using benchmark and tax data generated from a number of sources. It calculates the profitability of certain wine production and sales scenarios. Profitability is measured by gross margin.
The tool bases its initial calculations on pre-populated averages and estimates across the supply chain in order to create a basic benchmark. By adjusting the inputs in the comparison screen, the sensitivity to certain input costs — such as exchange rate, shipping and route to market — can be examined.
What is my gross margin?
Gross margin is the difference between revenue and cost of goods sold expressed as per cent of revenue. For example, if you had total revenue of $1,000,000 and your cost of goods sold was $600,000, your gross margin would be 40%.
$1,000,000 - $600,000 = 40%
What is the relationship between my gross margin and profitability?
Profit is calculated by subtracting other costs, such as sales and marketing costs, administration costs and interest payments from the gross margin figure.
Applications of the Gross Margin Ready Reckoner
The Gross Margin Ready Reckoner can be used for both production and market simulations. It calculates gross margin impacts from:
- Prices in destination markets
- Market selection (countries)
- Route to market alternatives
- Production inputs variations
Therefore, the Gross Margin Ready Reckoner can be used to simulate the impact of changes in product mix, pricing, markets and distribution strategies.
How do I use the Gross Margin Ready Reckoner?
Simply accept the standard terms and conditions of use and answer the questions on each of the three screens.
- Create your first benchmark report before moving on to make changes to your entries.
- Recalculate the gross margin and get immediate feedback on the effect your changes have on your sustainability.
- You can see your original results and the changes side-by-side and then print the results.