The job of a sales manager involves negotiating with customers on their orders. As a sales manager, you want to maximize the profit. You offer up-sales, cross-sales, and down-sales and apply discounts. Whenever you change anything in the sales order (say, add or remove items, or increase or decrease their prices), you might want to see whether the order is profitable for your company and whether the profit is big enough.
With the profit estimation tool, you can view the potential profit (or loss) of an order before making the final offer.
For instance, your company sells goods and supplementary services like air conditioners and mounting services. As a common practice, you can provide a discount for air conditioners if the customer also orders their mounting. You can sell air conditioners with a minimum profit and earn a greater profit on mounting services.
Alternatively, you can use another approach if the sales orders lots of air conditioners along with simple mounting and you plan to earn mostly on air conditioners rather than on services in this deal. Then you may want to estimate the profit for the mounting service individually, as it can include your expenses on technical expertise, tubes, fittings, other materials, and construction works and thus eat up your profit.
To estimate the profit for a sales order, 1C:Drive analyzes all items (both products) added to the order, their quantities, prices, taxes, and discounts, as well as the cost of each item. Once you change anything in the order, the profit estimation tool updates the figures.
To open the profit estimation for a sales order:
- Open the sales order.
- Click Profit estimation.
The profit estimation tool displays the products listed in the sales order.
The profit estimation tool analyzes the planned costs and the expected profit of a sales order and stores this data for future use. The actual costs and profit can differ from the planned ones. After the month closing, you can compare the estimated profits of the sales orders fulfilled within the month with their actual profits. This will help you improve the accuracy of your further estimations.
When estimating the potential profit of a sales order, to get the clear picture of the costs that are related to the order, you can add all these costs to the profit estimation, even if the customer is not charged for them directly according to the order. For instance, you can include goods you want to provide to the customer for free, mounter's wages, sales manager's bonus, assembly and delivery expenses, and packing material consumption.
1C:Drive supports several profit estimation methods. They differ by the prices used to calculate your company's costs. The following COGC (cost of goods sold) calculation methods are available:
- Latest purchase price. Read the latest item prices from supplier invoices.
- Price list. Read the latest item prices from the price list of a particular kind, like "Retail price", "Accounting price", or "Wholesale price".
- Counterparties prices. Read the item prices from a counterparty price list of your choice. This method is available only if the Counterparty price accounting option is turned on.
When working with the profit estimation, you can add extra items that are not available in the sales order, as well as delete these items. You cannot delete the items that belong to the sales order.
Also, you can apply discounts to individual items or to the entire order. You can enter a discount as a percentage or an absolute value.
In the Profit estimation comment field, you can specify a description that explains why you added an item to the calculation. This will serve as a reminder about the specifics and circumstances of the sales order to you and your co-workers.
To save the changes you made to the profit estimation, click Save and close. The next time you open the profit estimation for this sales order, you will see the results of the saved work. Saving the profit estimation records the discounts that you specified in the profit estimation to the sales order.
By default, a profit estimation displays the sales amount, costs, profit, and COGC calculation method for the sales order.
To hide the costs, profit, and COGC calculation method:
- Click the Show/hide COGS and profit button .
To show the costs, profit, and COGC calculation method:
- Click the Show/hide COGS and profit button
For instance, if you are a sales manager and you are communicating with a customer who is by your shoulder at the moment, you prepare a modified order, probably apply discounts in the profit estimation tool, check that the order is profitable enough, click the Show/hide COGS and profit button , and then show it to the customer for their approval. The customer can see the ordered items, their quantity, prices, discounts, and the payment amount. However, they do not see how much you are to spend and earn on the order. When the customer is no longer looking at your screen, you can click the Show/hide COGS and profit button to display the costs and profit again.
The simplest way to use the profit estimation tool is to populate a sales order, open the profit estimation, analyze the profitability of the order with or without discounts, and apply the discounts to the order if it is reasonable. In other words, the customer gets only what they pay for according to the order, and your only expenses are the cost of included goods and services.
However, the real business scenarios are often more complicated.
First, you may want to offer something for free to the customer. You do not include these extra goods and services in the sales order, but your company pays for them.
Second, you may have expenses that are not directly related to the order but still reduce your profit margin (like mounters' wages). You want to include them in the profit estimation but not in the sales order.
Let us consider a scenario where your company sells consumer electronics, and for each sales order that exceeds 3,000 EUR it offers the delivery and installation services for free.
In the profit estimation tool you need to include your expenses on express delivery and your mounters' wages. These expenses are not listed in the sales order, so you have to add them to the profit estimation.
If you want to add the same set of free services to many orders, you can save your time on adding them to your profit estimations. For this purpose, you can create a template, add the items and expenses to the template, and then import the items and expenses from the template for each order that fits the criteria. If an item or expense you want to add is not typical to such sales orders, you can add it to the profit estimation manually, without using templates.
To add a product or a service to the profit estimation:
- Click Add product as cost and select the item.
- Specify the item quantity, unit of measure (UOM), and cost.
To add an expense to the profit estimation:
- Click Add cost and select the expense.
- Specify the expense cost.
To create an estimation template:
- Click Apply template (or Use another template).
- Click Create.
- In the Description field, enter the template name.
- Do any of the following:
- To add an item, click Inventory, click Add, select the item, and then specify the item quantity, unit of measure (UOM), and cost.
- To add an expense, click Expenses, click Add, select the expense type, and specify its calculation method and value.
- Click Save.
Once you create a template, it becomes available to all your co-workers who use 1C:Drive.
You can import data stored in one or several templates to a profit estimation. Profit estimations do not store links to templates. So, if you change the template or even delete it afterwards, this does not affect the profit estimation content.
To import template data to the profit estimation:
- Click Apply template (or Use another template).
- Select the template and click Select.
If you have an initial profit estimation saved to a spreadsheet file, you can import it to a sales order. This simplifies the order analysis as you do not need to manually enter data from these files into 1C:Drive. The following file formats are supported: XLSX, MXL, and CSV.
To import a profit estimation from a file:
- Open a sales order.
- Click Profit estimation.
- Click the Import costs from a file (XLS, MXL, or CSV) button .
- In the Import data from external sources wizard, select the file you want to import, set the mapping between the spreadsheet columns and the profit estimation fields, and complete the import procedure.
If an item included in a sales order is to be produced and its bill of materials is available, you can use the bill of materials to register the item cost in the profit estimation.
To be able to register costs based on bills of materials:
- Click Settings and then, in the Accounting settings section, click Production and select Enable production subsystem.
- In the list of products, for each item to produce, specify that its Replenishment method is Production.
If the sales order includes the items your company is going to produce, you can switch between two profit estimation views: for the entire sales order or for a particular production item.
To change the view:
- In the View content list, select Entire order or the name of the particular item, respectively.
Alternatively, to change the view for a particular production item:
- In the Product column, double-click the item.
In this view, you can edit the bill of materials of the production item if it is already assigned to the item. If there is no bill of materials assigned, you can enter its content and then, when you save the profit estimation, 1C:Drive creates the bill of materials and assigns it to the item. Also, you can import a bill of materials from a spreadsheet file in the same way you import the profit estimation for the entire sales order.