Some times we get questions about how the gross profit is calculating on the edit proposal. Here you will find how to understand how it calculates.

If you look in your included services you will notice that you may have costs that you are telling the system to “not margin”. Those costs going through not margined can affect the dollars showing in the gross profit row. If you want these to line up you will need to check the margin box in the included services area.

Some dealers attach the margin to those included services as a “selling price”.

The COGS is made up of two calculations.

The costs you want margined and the costs you don’t want margined. Then the selling price is calculated off of the desired margined COG’s divided by (1-__%) + undesired margined COG’s to come up with a selling price. After this is calculated then we add sales commission and the buydown rate.

It is imperative when you uncheck the margin box in the included services area that you have added the desired margin you wish to capture. Keep in mind the program can’t capture this margin since it is calculated by the user outside of the program.

This is a very complex formula. But trust that it is right. The only thing we have zero control over is un-margined “included services”.

The photo below shows two included services that will both be included in the COGS. However each one of them will be treated differently since the $200 is margined on one and not on the other. Notice the box is checked for the last one but not the first one.

They both will appear in the COGS, but if the column calls for a 50% margin, the “Digital Thermostat” would price out at $400 and have a margin of $200. The “Remove and Haul Away” would also appear in the COGS but would escape margin and would pass through to the selling price before commission at $200.