Trading margin

The margin ( English gross margin is) a derived price size in the industry , in particular for commercial enterprises is used. For traded goods or services , the trading margin is the difference between the list sales price and the cost price in relation to the list sales price , usually given in percent .

General

For the businessman , the determination of his success is of the utmost importance. To do this, he must understand the sales process as the difference between the proceeds achieved and the costs incurred. If the costs are lower than the revenues, the result of ordinary business activity is positive and is referred to as profit . From a calculation point of view, the most important prerequisite for making a profit is the trading margin. The older business literature used very different terms for the trading margin , ranging from profit to gross profit, premium, gross premium, range to calculation rate.

Development history

The specialist literature apparently began in 1931 by Julius Hirsch with a broad discussion of the trade margin. Particularly after the Second World War, the trade margin debate dominated the entire field of distribution economics. In 1939, Carl Ruberg pointed out that price-related changes in sales also affect the trading margin.

Is z. For example, if you bought a box of matches at a purchase price of EUR 0.03 and calculated with a margin of 100%, this leads to a sales price of EUR 0.06 and a gross profit of EUR 0.03. Since the price maintenance regulation of November 23, 1940 first spoke of the trading margin in commercial law , the term trading margin quickly spread across the board in business administration . Rudolf Seyffert , the founder of the Cologne Institute for Retail Research , pointed out in 1952 that each link in the retail chain ( producers , wholesalers and retailers ) determines its own retail margin.

A fundamental work appeared in 1953 as a habilitation thesis by Edmund Sundhoff - a student of Seyffert - who dealt with all aspects of the trade margin. Since then, accounting , pricing policy , price calculation and cost accounting have been closely related to the trading margin . The business economist Erich Gutenberg pointed out in his basic work in 1955 that the methods of calculating the trading margin were not uniform and that sometimes the transport costs were borne by the manufacturers and were not included in the trading margin, while they were sometimes included in the trading margin. Hans-Otto Schenk made in 1991 points out that neither commercially between profit ( operating profit ) and (operating) profit margin still between profit and handling costs as a correlation there.

calculation

In absolute values ​​(absolute amount range) the trading margin is identical to the gross profit :

   Umsatzerlöse
   - Wareneinsatz
   = Rohertrag     

The difference between revenue and cost of sales is the gross profit, the handling costs , the cost of goods losses ( spoilage , loss, theft ) and is intended to cover the targeted profits. Neither input tax (of the cost of goods) nor value added tax (of the list price) are included in the trading margin; the net prices apply.

The trading margin as a ratio - usually given in percent - represents the difference between the sales price and the cost price in relation to the sales price:

${\displaystyle {\text{Handelsspanne}}={\frac {{\text{Nettoverkaufspreis}}-{\text{Einstandspreis}}}{\text{Nettoverkaufspreis}}}}$

If the purchase price increases while the sales price remains constant, the trading margin decreases and vice versa. In order to keep the trading margin constant, the selling price must be increased accordingly. To do this, you use the calculation surcharge as a percentage surcharge on the cost price to calculate the list sales price :

${\displaystyle {\text{Kalkulationszuschlag}}={\frac {{\text{Nettoverkaufspreis}}-{\text{Einstandspreis}}}{\text{Einstandspreis}}}}$

The trade margin is the complement to the cost of sales ratio . For example, if the cost of sales is € 400,000 and the turnover is € 1,000,000, the cost of sales quota is 40% and the margin is 60%.

species

Edmund Sundhoff offers a systematization of all possible trade margins. The form of calculation knows the amount ranges (absolute ranges) and the percentage ranges (relative ranges). After the calculation , there is the trade impact (surcharge method, premium margin) and trade discount (discount calculation, discount margin). The markup margin is calculated as follows:

${\displaystyle {\text{Aufschlagsspanne}}={\frac {{\text{Nettoverkaufspreis}}-{\text{Einstandspreis}}}{\text{Einstandspreis}}}}$

When calculating, an imputed profit share is to be taken into account, consisting of

• the imputed entrepreneur's wages (for the employer's work ),
• the imputed interest (for the operating capital ) and, if applicable,
• the imputed risk premium (for the riskier investment of the capital employed in the company instead of as a financial product )

Revenues are taken into account in the discount margin:

${\displaystyle {\text{Abschlagsspanne}}={\frac {{\text{Nettoverkaufspreis}}-{\text{Einstandspreis}}}{\text{Nettoverkaufspreis}}}}$

Both ranges differ only in the denominator , where the purchase price is to be used as a basis for the premium range and the net sales price for the discount range.

As realized margin ( actual range , tee margin or discount rate) makes them the payment for the services provided by trade performance is, as yet unrealized, planned trading range ( target range , premium range) it represents the mark-up rate of the calculation.

${\displaystyle {\text{Handelsspanne}}={\frac {\text{Handlungskosten}}{\text{Nettoverkaufspreis}}}}$

The trading range resulting ultimately in which the action costs are compared to the net sales price.

Business aspects

The task of the pricing policy of retail companies is to find an adequate sales price for the services offered. For this purpose, the trading margin serves as payment for the distribution function assumed by the trade . Trading margins, as real margins, are price differences that are caused by the fulfillment of trading functions. In trading companies, it is often specified as part of the operative pricing policy and used in the form of a mark-up calculation to determine the item sales prices. In the German food retail trade , 95% of the price is set via calculation surcharges.

The mark-up margin is only a minimum or orientation value for pricing . If demand allows it, an attempt can be made to achieve a higher trading margin ( skimming strategy ). If the market does not allow the planned trading margin to be realized, for example due to lower competitive prices or declining demand, a conscious undercutting strategy is sought (in extreme cases, "competitive prices") or a special offer is planned, the sales price must be reduced, possibly below the cost price. The associated losses in gross profit must, if possible, be compensated for by savings in handling costs or by increasing inventory turnover . However, a reduction in individual operating costs , for example personnel costs , does not automatically lead to an improvement in the operating profit situation , but merely tends to improve the profit share of the trading margin for the item in question.

In the calculation ( ex ante ) and in the determination of success ( ex post ), trade margins can be related to any object, for example as a single item range or as an average variety, item, product group, department, branch or company trade range. Profits as the excess of all revenues over all costs can only be determined in trading ex post and only for the entire company. Unlike margins, however, profits can not be determined per piece, type, article or other product range ; This is because it is not possible to allocate all cost shares to the respective range in a factually and precisely timed manner. At most, it is possible to calculate contribution margins for larger parts of the assortment , namely by deducting proportional handling costs from the corresponding trading margin .

For trade management, specifically for trade controlling, the permanent monitoring of all trade margins and gross profits as a tactical trade marketing measure is of the greatest importance. The temporal and spatial (internal and inter-company) comparison of trade margins and, above all, of range-related key figures that are formed by linking trade margins with cost and / or income-related parameters (staff, land use, turnover rate, interest charges, bonuses, etc.), gives modern trade management an excellent control tool. For example, the ranges and stock turnover rates recorded in the merchandise management system can be combined into a key figure for each type. This in turn can be linked with other data , such as the personnel working hours or the presentation area used. Management indicators refined in this way can be listed in rankings and can serve as a valuable basis for decision-making, e.g. B. for the purchase of goods, for the calculation, for the allocation of space and the placement, for special offers, possibly also for a listing.

Outside of trade, the profit margin and the margin, especially in industry and in the service sector, fulfill the same purpose as the trade margin , because they are business indicators that represent gross profit in relation to a reference value ( output , manufacturing costs ).

Retail margins

In 2013 there were the following trade margins in German retail: home textiles - specialist trade 47.3%, perfumeries 45.4%, shoes 39.2%, glass / ceramics / porcelain 39%, paper / office supplies / stationery 35%, furniture trade 36 , 8%, sporting goods / camping 32%, book retailing 31.7%, toys 31%, electronics 30.5% or pharmacy retailing 25.2%.

literature

• Lothar Müller-Hagedorn: Der Handel , Stuttgart 1988, ISBN 3-17-015338-2 .
• Hans-Otto Schenk: Market Economics of Commerce , Wiesbaden 1991, ISBN 3-409-13379-8 .
• Hans-Otto Schenk: The trade margin as a central performance and management indicator in trade (parts I and II). In: wisu, issue 1/96, pp. 43-49, and issue 2/1996, pp. 133-140

Individual evidence

1. ^ Edmund Sundhoff, Die Handelsspanne , 1953, p. 4
2. ^ Julius Hirsch: Die Handelsspanne: Material for the lecture on "The determinants of the Handelsspanne" . 1931, p. 1 .
3. ^ Carl Ruberg: Sales promotion in retail . Gabler Verlag, 1939, ISBN 3-663-19821-9 ( limited preview in Google book search). References for the term trade margin in the book
4. ^ Rudolf Seyffert, The Problem of Distribution , in: Arbeitsgemeinschaft für Forschung des Landes NRW, Issue 16, 1952, p. 13 f.
5. ↑ Edmund Sundhoff: Die Handelsspanne , 1953, p. 1
6. ↑ Erich Gutenberg, Fundamentals of Business Administration , Volume 2: The paragraph , 1963, p. 353
7. ↑ Hans-Otto Schenk, Marktwirtschaftslehre des Handels, 1991, p. 197
8. ↑ Committee on Definitions for Trade and Distribution, 2006, p. 100
9. ↑ Willy Schneider / Alexander Hennig, Lexicon Key Figures for Marketing and Sales , 2008, p. 148
10. ^ Edmund Sundhoff, Die Handelsspanne , 1953, p. 4 ff.
11. ↑ Willy Schneider / Alexander Hennig, Lexicon Key Figures for Marketing and Sales , 2008, p. 321
12. ↑ Reinhold Sellien, Dr. Gabler's Economic Lexicon , 1977, Sp. 1942 f.
13. ↑ Klaus Barth / Michaela Hartmann / Hendrik Schröder, Betriebswirtschaftslehre des Handels , 2007, p. 256
14. ^ Edmund Sundhoff, Die Handelsspanne , 1953, p. 17
15. ↑ Mercer Management Consulting (Ed.), Retail Study Price and Assortment Management as a Success Lever in Retail , 2003, p. 4
16. ↑ Statista - the statistics portal, retail margins in retail 2013