Margin

Margin

Written by Sébastien MEIGE
Updated over a week ago

# Definition

The margin of a product (GTIN) expresses the total value generated by a product, including VAT.
The margin is calculated by the volume of sales of the product over a period multiplied by the difference between the weighted average selling price of the product ( PVMP ) and the average manufacturer purchase price excluding tax of the product ( PFHT ).
The margin of an aggregate of products is the sum of the margins of the products constituting the aggregate.
For a brand made up of 2 products, the margin of this brand is the sum of the margins of each product.

# Example

Let a B mark made up of 2 GTINs which we will call Product 1 and Product 2.

Product 1 is sold at 10,000 units with a weighted average sale price of € 9.70 and an average manufacturer purchase price excluding tax of the product of € 6.00.
Then:
MARGIN (Product 1) = VOLUME (Product 1) x [PVMP (Product 1) - PFHT (Product 1)]
MARGIN (Product 1) = 10,000 x [€ 9.70 - € 6.00]
MARGIN (Produt 1) = € 37,000

Product 2 is sold at 2,000 units with a weighted average sale price of € 9.00 and an average manufacturer purchase price excluding tax of the product of € 6.50.
Then:
MARGIN (Product 2) = VOLUME (Product 2) x [PVMP (Product 2) - PFHT (Product 2)]
MARGIN (Product 2) = 10,000 x [€ 9.00 - € 6.50]
MARGIN (Product 2) = € 5,000

Consequently for the brand margin:
MARGIN (Brand B) = MARGIN (Product 1) + MARGIN (Product 2)
MARGIN (Brand B) = € 37,000 + 5,000 €
MARGIN (Brand B) = 42,000 €

# Terminology

The margin can be translated into English as "Margin".

Pharma only.