Breaking Down Profit

Now might be the time you’re getting financials and tax returns back from your accountant to sign and file before the 31 March deadline.  You might have a glance at the financial statements, notes and resolutions.  If you have a look at your Profit & Loss statement, you’ll get a high-level idea of your revenue, expenses and profit.


You can then take your profit and divide by your revenue to get a Profit Margin %.  You can apply this to each product you make (or service you sell), and for example say:

 "I sell this for $100, and my profit margin for the year was 15% - my profit on this item is therefore $15."

This would be a very crude way to apply profit to your products, but how else could you break it down?

Breaking Down Profit:

  •  a monthly profit and loss will be able to show you how you earned income compared to profit through the year
  • if you complete a number of special projects during the year it might be useful to know the profitability on these
  • if you sell by season, knowing profit might be a good way to identify where to advertise, production costs and staff levels
  • you could also track profit by product or service group to find your better performing categories, or ones you might need to cut


Breaking down profit in these ways help you to understand your numbers better, make decisions on spending and project forward with more clarity.


There are a few ways to do this in your current accounting and point of sale system, from creating new accounts to tracking categories.  Get in touch to talk through what are the best options for your business.