How Margin is Calculated

On various pages in Fulcrum there is a margin percentage shown. Understanding this margin is especially important when using margin based pricing.

First, this is calculating the profit margin, not a markup. To compare the two:

$$ Margin = (Price - Cost) / Price = Profit / Price $$

$$ Markup = (Price - Cost) / Cost = Profit / Cost $$

A key takeaway from that is: margin should always be between 0 and 100%, unless you are intentionally paying the customer (>100%) or selling the item at a loss (<0%)

Quick Example

Using these in an example, let’s say it costs me $7.50 to make a pizza.

If I sell it for $15 then I’m making a 50% margin. But that is a 100% markup from my cost.

Setting up Margin Based Pricing as a System Default

If you would like to use Margin Based Pricing as the default pricing method for all of your items, you can set this up under Business Setup > System Data > Sales

Using Margin Based Pricing on Quotes and Items

You can also choose to use margin based pricing on a quote by quote basis. To do this, after you have added the item to your quote, select Margin Based in the pricing options within the quote line item. From there, you can enter the desired margin for the item.