Introduction

There are multiple pricing strategies that help you get your product pricing correct, but the most important constituent in determining the price is the cost of the product. 

Tagrain allows you to capture the cost of the product and the markup percentage on the product to arrive at the Retail Price at which you may want to sell the product to your customers. 

It is important to note that Tagrain follows the Standard Costing method where the cost of the product is fixed and does not change based on varying purchase costs at the time of Goods Receipts. Similarly the product cost does not change when the product is issued out through the Goods Issue transaction. 

The application assumes that the cost of a product is calculated ‘outside’ the application and the application only ‘notes down’  this  cost to be used to generate gross profit and margin % when the product is sold (or for that matter refunded) 

Costing and Pricing 

Mentioning the cost of the product and its markup % determines its Retail Price. This information is used to calculate the Gross Profit and Margin % of the product. Selling a product increases the gross profit whereas if the product is refunded, the application records a negative gross profit. These positive and negative values help determine the gross profit and margin of the product for every transaction. 

Costing and Pricing Rules

Product Cost, its Markup % and therefore the Retail Price is defined in the Product master in Tagrain. These values are mentioned in the Costing and Pricing accordion. 

There are certain rules that govern the determination of Retail Price or the Markup %. Mentioned below are rules that will help you better understand the Costing and Pricing accordion. 

• Item Cost is the value that you will have to enter. This is not a calculated field, which means that even if you enter Retail Price and the Markup %, the application will NOT back calculate the cost 

• Markup % and Retail Price are calculated fields 

• If item cost and markup are mentioned then retail price is automatically calculated

• If item cost and retail price are mentioned then the markup is automatically calculated

• If no markup is mentioned the retail price will be equal to the item cost 

• Retail price is automatically defaulted to the retail price of the product across all the stores

• If the retail price for the store is edited, any changes to the retail price in the costing and pricing accordion will NOT change the edited store retail price 

• Product Cost, Markup and Retail Price of the variant products is inherited from the parent product. Should there be a need, the retail price of variant products can be changed individually

Update Existing Products

If you are new to Costing and Pricing, explained below is the process of updating the product cost of  your existing products.

The most convenient way to update the item cost of your existing products is by bulk uploading the costs in the application. 

This is best done by exporting the entire product master data into an Excel sheet, updating the item cost for the products and importing back the updated sheet. 

You can export the product master data from the Product list view

Once you have exported the product master data, open the excel workbook and update the Product Cost field for all the products. 

Please note that for variant products, you will have to update the cost of the parent product AND the product cost of the variants of this parent product.

This is also a good time to revisit the Retail Price of the products and update them. 

Once you are done updating the sheet, save it and import this from the Product list view by clicking on Import and then selecting the updated sheet. 

As you can see, the application has calculated the Markup % of the product(s) based on the Item Cost and the Retail Price. 

Calculation Formulae 

The main purpose of capturing the cost and markup % for every product is to analyze its gross profit and the margin %. 

Explained below are the formulae that have been used to determine gross profit and margin percentages. 

Net Sales

Net Sales = Sales (inc. tax) - Refund (inc. tax)

Gross Profit 

[Sales (ex. tax) - Refund (ex. tax)]  - [Item Cost ]

Margin Percentage 

Gross Profit / [Sales (ex. tax) - Refund (ex.tax)]

Net Tax

[Sales (inc. tax) - Sales (ex. tax)] - [Refunds (inc. tax) - Refunds (ex. Tax)]

Reporting

Quite a few reports mention the gross profit and margin % at different levels of granularity. You can analyze these figures at the store level OR at the product level.

Transaction Report

Transaction Report is used for reviewing and monitoring the transactions for all the stores or a particular store. This is a ledger kind of a report that lists all transactions done during a specified date range. 

Every transaction listed in the report can be further expanded by clicking on the arrow at the beginning of the transaction row. 

Expanding the transaction gives the details of the products sold in the transaction and also the different payment types used to pay for the transaction.

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This report can also be exported into an Excel workbook. The exported workbook has three worksheets 

• List of all the transactions

• List of all the products sold in every transaction. This worksheet details the gross profit and margin percentage of the product. 

• List of payment types used in every transaction

Sales Report (and all its subreports) 

Sales Report displays the sales during the selected date range in a Store / POS.  The sales data can be viewed by one of the six different criteria. The 6 different criterion are:

• By Store 

• By Product 

• By Product Group

• By Customer 

• By Customer Group 

• By Cashier 

The data in the report depends on the filtering criteria that you have selected. For example, executing the report by store gives consolidated numbers of gross profits and margin % at the store level,  whereas executing the report for Product will display gross profits and margin % by products. 

Similarly the report can also be generated for Product Groups, Customers, Customer Groups and Cashiers