Estimating Gross Profit
Many businesses focus on the estimated profitability of prospective sales transactions. Businesses that operate in price- and cost-sensitive environments often use estimated gross profit to price sales proposals, negotiate with suppliers, and compensate their sales people. Participants in the product distribution channel must have the information necessary to balance their prices, costs, and estimated gross profit before initiating a sale. With the right information, these distributors, wholesalers, and other resellers can make informed selling and buying decisions.
The Gross Profit feature provides an easy and elegant way to accurately estimate the gross profit of certain transactions, using the estimated item costs and any proposed price discounts. This feature provides vital data to companies whose overall margins and ultimate success depend on accurately estimating and improving gross profit. For more information, see What is Gross Profit?
Different types of users may use this feature, including sales representatives and sales managers, sales operations employees, executives, and administrators. For usage descriptions and examples, see Who Uses Gross Profit and Why?
To make gross profit estimates available, the Gross Profit feature, and any related features that you need for the desired data, must be enabled. See Setting Up Gross Profit.
When these features are enabled, gross profit fields are available on standard transaction forms and can be added to custom transaction forms. These fields also are available to custom reports, advanced and saved searches and custom KPIs, and are supported for CSV Import, SOAP web services, and SuiteScript. See Using Gross Profit Fields.
The Cost Estimate Type field is an important gross profit field. This field is the method used to estimate costs for an item. A default value for this field can be set on item records; some users can edit this value on transaction item lines. See Working with Cost Estimate Types.
For more information about the Gross Profit feature, see Frequently Asked Questions about Gross Profit.
Because the Gross Profit feature uses estimated cost to calculate gross profit, it does not result in postings to general ledger accounts. You should be very careful if you use the estimates provided by this feature to post to general ledger accounts.