Every line item makes 40%. A quarter of your customers don’t.

Gross margin is measured on what you sell. Profit is decided by who you sell it to, and most reporting systems are built to hide the difference.

By Steve 5 min read
Abstract bridge artwork for Every line item makes 40%. A quarter of your customers don’t.

A distribution business runs a clean 40% gross margin on almost every product line. Discounts are controlled, purchase prices are reviewed annually, and the sales team knows the floor. On paper, the margin question is settled. Yet net profit sits stubbornly at 4%, and nobody can say precisely which customers are producing it. The reason is structural. Gross margin is calculated per transaction, against product cost. Everything else, the phone calls, the split deliveries, the expedited freight, the credit control, the bespoke reporting, the returns, sits below the line as…

Keep reading for free

Create an account to read the rest.

The whole library is free. No card, no subscription, no trial that quietly ends. An account simply lets us know who we are writing for, and opens every article from here on.

  • Every article, in full, at no cost
  • New articles published every weekday
  • Takes about twenty seconds
Create a free account I already have one

Free means free. We will not charge you for the library, and you can read as much of it as you like.

Important: General information only. Rialto Bridge articles describe patterns and considerations that may apply to a business; they are not financial, legal, tax or accounting advice, and they take no account of your particular circumstances. Consider your own situation and seek advice from a qualified professional before acting.

More on Pricing

Scroll to Top