How To Calculate Profit Margin in PCD Franchise

How To Calculate Profit Margin in PCD Franchise – The Indian pharmaceuticals industry is a profitable market. It is growing its strength across the globe. If you are someone who wants to own a franchise business then you need to have knowledge about how to calculate profit margin in PCD franchise. It is important to have some knowledge as many companies ask for it.

Profit is an important element as it encourages the person to go further for more risks and business opportunities. Different companies give a different margin of profit. It is best to go with a company with a better profit margin for better business. No worries if you don’t know how to calculate profit margin in PCD franchise business. In this article by Focus Healthcare, we share some details information of profit margin and calculation procedure to obtain profit margin and net rates.

Steps To Calculate Profit Margin In PCD Pharma Franchise Business

You do business for profit purpose! No profit means, no business in future. You need to have a clear idea about the profit margin that you can expect from a company and business. Before jumping to any conclusion, you need to have knowledge of the prevailing marketing conditions. If you want to calculate the profit margin here takes a look at the following:

• Calculate Total Cost (TC): First, you need to have the idea of the total cost. These include expenses that you have to bear on the products. You can even as the company about it in case of any confusion.

The formula for Total Cost

TC or Total Cost = Manufacturing expenses + Administration expenses + Selling Expenses + Taxes | Other Cost (Total Fixed Cost + Total Variable Cost)

• Take Out Net Rate: Then you need to calculate net rate which is important. Once you get the total cost, you can take out the net rate which is the final price of the commodity. It is further sold at MRP or Maximum Retail Price. The % differs from company to company due to the difference in various factors and policies adopted by the company.

The formula for Net Rate

= Total Cost X Percentage (%) of Margin

• Calculate Profit Margin/ Net Margin/ Net Profit Ratio/ Net Profit Margin: This amount that you will get the calculation. Just follow the steps to get the profit margin.

Formula For-Profit Margin

= Net Profit / Revenue Or Selling Price

*(Net Profit = Revenue – Cost)

Things To Added/ Deducted To Know The Realization Amount

The pharmaceuticals business comprises of loads of factors. You need to have a fluent system of distribution across the place. Many people like to have a good network of doctors, clinics and pharmacists etc under their belt. This can contribute to profit margin realization amount. Here are some of the points that you need to keep in mind to get the actual amount while calculating profit margin in pharma franchise business:

1. Deduct the profit margin from the revenue.
2. Different pharma companies offer some benefits for 10 plus 1 or 10 plus 2. You need to increase the amount with the same.
3. If you are connected with a third party for sales and promotion like doctors under Price to Retailer (PTR), then deduct the amount. It is usually a percentage of around 20% to 30% share.
4. In case you have hired a stockiest, you need to deduct the commission from the same.
5. If you have made any extra expenses on it like transportation and shipping then you need to add it to the list.
6. Add expenses incurred during the period.

Conclusion

It is very easy to calculate profit margin for certain period It is very important to make research on different markets and talk to the company about the percentage they are offering to their associates. Many times a small company offers better profit margin to their clients than bigger companies. You need to select a trustable and genuine company. Focus Healthcare is the best PCD Pharma Franchise Company in India that offers genuine and good business in India. I hope the article was beneficial to you.