“Net sales are up four per cent and gross profit is down two, and nobody can tell me why by Thursday.”

Commercial says it's mix. Operations says it's cost. Finance has three spreadsheets and a board call on Thursday. Each of them is probably partly right, which is why the meeting can't settle it.

What usually goes wrong

• The bridge in the board deck doesn't add up to the total change, so the meeting argues about the bridge instead of the business
• Rebates and trade spend arrive as one figure per customer, so nobody knows what a product really earns after them
• The biggest customers look the most profitable, because the cost of delivering and marketing to them is booked somewhere else
• Promotions are judged on the volume they move, and nobody checks what they did to margin
• Products launched or dropped during the year fall out of the comparison, and their effect lands on the wrong line
• Margin is shown on every row, even where the cost of goods is missing, so a precise-looking number is simply wrong

It suits every company that sells goods: manufacturers, brand owners, distributors, wholesalers and retailers. It is a natural first build, because it needs only your sales data to begin.

How the software answers it

1. Start with what changed. Volume, net sales, gross profit and margin against last year, for the month, the year to date or the last twelve months, with the biggest gainers and losers by category, brand, market or customer.
2. Follow the money from gross to net. Every discount, rebate and piece of trade spend on its own line, by customer or product, with each rate against last year. A rebate paid as one monthly figure per customer is spread over the products that customer bought, so every product shows its true net price.
3. Explain the movement. A bridge from last year to this year that adds up to the total, with price, volume, mix, new products and lost ones each shown separately, cut by customer, brand, category, market or channel.
4. See who earns the margin. Profit by customer and product after discounts, trade spend, logistics and marketing, and a ranked list of the customers whose discounts cost more than they bring in.

Where a product has no cost of goods, its margin is left blank and the product is named, so nobody reads a margin that isn't there. Key tables export to Excel with their formulas, so your team can see how each figure is calculated and keep working with it.

What we build for it

Examples from software we have already built:

• Sales and margin by any dimension, or any two together, this year against last, in totals or per kilo
• Gross to net on every invoice line, from gross sales through each deduction to net-net sales and gross profit
• A customer P&L, and a map of profitability by customer and brand at gross, contribution or net margin
• Realised price by brand and month, price by pack size, and every place a bigger pack costs more per kilo than a smaller one
• Promoted sales against base sales, margin by depth of promotion, and the return a planned promotion should bring after its cost
• Trade and marketing spend by customer and brand against last year, and where a budget would earn the most
• Portfolio complexity: how few products and customers carry most of the sales and profit, and what the long tail is worth
• A group view that removes sales between your own companies, so internal margin never shows up as group profit
• Price, volume and mix, with the method named on screen and a formula table behind each figure
• A pivot table for the question no standard screen answers

More commercial analytics screens →

Screens

Where to start

It starts with a paid pilot on one question, such as one customer's gross to net, then a build at a fixed fee and an annual subscription.

Prices →How an engagement runs →

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What changed against last year, and where did the growth and the drag come from? — Illustrative data.