How Does commonsku Calculate Margins?

commonsku measures each project's Booked and Billed Margins for comparative reporting. Learn more about your margins, including how they're calculated and how you can track them.

On this page:

Margin calculations

Margin vs. markup

Booked Margin

Billed Margin

Booked vs. Billed Margin

Reporting

FAQ

Margin calculations

A project's margin is the overall profit. Margins are calculated by subtracting a project's costs from the invoice(s)  revenue (subtotal):

MARGIN = SUBTOTAL - COSTS

Margin percentages are calculated by subtracting a project's costs from the revenue, then dividing the remaining amount by the project's revenue:

MARGIN % = SUBTOTAL - COSTS
SUBTOTAL

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Margin vs. markup

Margin refers to sales revenue (subtotal) minus costs.

MARGIN = SUBTOTAL - COSTS               MARGIN % = SUBTOTAL - COSTS
SUBTOTAL

Markup refers to the amount the cost needs to increase to hit a selling price.

SUBTOTAL = COST + MARKUP                MARKUP % = SUBTOTAL - COSTS
COSTS

For example, let's say you are paying $10 for an item, then selling it for $20.

  • The margin would be: $20 - $10 = $10, which is a 50% margin
  • The mark up would be: $10 + $10 = $20, which is a 100% markup

Although the margin and markup have the same value, $10, the percentages are very different. commonsku does not use markups; it measures your profit and sales prices based on margins.

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Booked Margin

The Booked Margin is the margin you "booked" when you made the sale; it's based on the cost and selling price of each item on the sales order.

The Booked Margin may include or exclude services depending on how your team has set up margin calculations (Profile Icon > Settings > Company Settings >  Commissions) and if the line was intentionally included or excluded in the margin calculation.

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Billed Margin

The Billed Margin is the actual profit on the order; it's based on the cost of supplier bills and the selling price from each item on the invoice.

The Billed Margin may include or exclude services depending on how your team has set up margin calculations (Profile Icon > Settings > Company Settings >  Commissions) and if the line was intentionally included or excluded in the margin calculation.

A project's Billed Margin will show 100% until you have begun adding supplier bills to the project. The Billed Margin does not factor in any costs from the invoice, only costs from supplier bills.

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Booked vs. Billed Margin

Booked and Billed Margins are the same when:

  • Selling prices on the invoice are the same as the selling prices on the sales order
  • Costs on the bills are the same as the costs on the invoice

Booked and Billed Margins are different when:

  • Selling prices on the invoice are different than the selling prices on the sales order
  • Costs on bills are different than costs on the invoice

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Reporting

Booked Margins are used in the:

Billed Margins are used in the:

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FAQ

Can I set a default margin?

Yes. You can set your default margin through Profile Icon > Settings > Company Settings > Setup > Defaults.

Why does commonsku sometimes change my margin percentage?

There are three reasons commonsku may change your margin percentage:

  • Retail prices and margins only display up to two decimal places. At times, particular margins are required to generate a retail price that is two decimals or less.
  • The margin will change anytime there's a change to the retail price.
  • The margin will change anytime there's a change to the cost, and the retail price is locked.

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