Product profitability

Master / Vertiefung Product Management
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Product profitability
Good evening everyone!

I am currently working on the Product profitability chapter. Could you share your understanding of cells F11 - F14 on the excel spread sheet: Percentage channel, Margin distribution channel, Net list price, Gross price.

In my opinion, usage of this terms is dependent on distribution strategy and I am not sure that is applicable for our case.

Revenue culculation as I see it: Revenue=pricenumber of units, where price= costs + margin
and, for instance, Revenue in January is going to be culculated B21C14

I would highly appreciate if you could share your understanding.

Thank you in advance!
Marina

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Hi Marina,

since we developed our own way of calculating product profitability I cannot help you directly concerning those cells.
At some point in our project we surely have to clear up our way of distribution and how much this will be (see Product strategy template from A3, p.12).
Maybe this helps a little. :slight_smile: Otherwise I would just skip those fields at this point in time.

Bettina

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Dear Marina

Here is what F11-F14 are:

Percentage channel - proportion of distribution cost in Net list price
Margin distribution channel - cost of distribution (marketing, logistics, agents etc.), equal to Net list price minus Revenue per unit (cell C14)
Net list price - Gross price without German VAT of 19% (119/100)
Gross price - the price you decide to assign to your product (can be based on competitor analysis or your costs or some other calculation)

I think this is relevant for all projects, because you need to plan your distribution and costs for that. In the later sections of Agile Business Plan you will have a chance to define specific distribution channels and possibly their specific costs. However, having this estimated calculation is useful for profitability and business case calculations.

Cheers, Nick

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Dear Bettina and Nick,
thank you for your comments!
Marina