Profitability Reporting Series: “Know Thy Products”


Hi everyone, over the next few weeks we’ll be exploring a three-part profitability reporting series. This week, we’re looking at how to gain insight into your product profitability, and how BI360 can help you become more competitive by generating more accurate profitability analysis.

While there are countless variables that impact your product’s profitability, we’ve used an allocation model that includes four key areas:

  • Salaries per product: How much are you paying your employees to work on certain products? By capturing the percentage of time each manager spends working on each product or brand, you can understand the impact of salaries related to your products.
  • Headcount per product: Are specialty products utilizing too much of your staffing resources? It’s critical to understand who’s working on which product and adjust your headcount accordingly.
  • Square footage per product: How much of your commercial space is allocated to each product? By leveraging data stored in your GL statistical account, or by directly entering data into the model, you can see your cost of doing business by the square foot.
  • Direct expenses per product: How much should be allocated towards expenses like marketing, consulting, contracted services, etc.? Both the allocated expenses and the actual expenses need to be accurately accounted for.

    Of course, your company will use its own allocation model, and with BI360’s 3rd generation reporting tool, you can generate all the allocations needed to support your ordinary company/department reporting with P&L’s at the product or product group level that gives you better insight your products and your profitability. Below is a video that further highlights these points.