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Cost of Inventory Calculator from Profits Plus

Go to a trade show, or receive a special order offering from a vendor, as you are trying to decide how to place an order for merchandise:
Order a smaller quantity, but pay a higher price, a shorter time to pay for the merchandise and maybe pay a higher price for the delivery of the merchandise.

Order with the special offering, and you receive a much longer time to pay for the merchandise, perhaps free freight, but you have to purchase a much larger quantity of merchandise.

Which way is more profitable for your business? Previously, you had to perform a lot of calculations or just take a good guess.

We now provide you with a Cost of Inventory calculator.

You enter this information:
How many you sell each month
The cost when ordering in the traditional method and in the special order methods
The cost of freight for each of the two methods
The quantity you order with each method
How long you get before you pay for the item
The cost of money

When using the Cost of Inventory calculator, enter this information, click enter, and you will see the answer for each of the next eight months. You also have the option of seeing this information in a line chart format.As you create the initial calculated gross margin, the cost of the freight is not a component of that calculation. However, as you look at the calculations for the 60 to 240 day time period, we take a different approach. As you would have paid for the freight, and there is an anticipated difference in the freight cost of the two buying scenarios, we allow the freight to be utilized as a component of the gross margin calculation.

(Enter data in the column of cells highlighted in green)

Press this button to load test data -->
1    
2  Selling price of product
3    
4 Cost of the product purchased in traditional manner:  
5  Cost of the product
6  Cost of freight per item
7  Landed cost of the product purchased in traditional manner
8  Number of days to pay invoice in traditional manner
9    
10  Initial gross margin of the product purchased in traditional manner
11    
12 Cost of the product purchased in drop ship or special manner:  
13  Cost of the product
14  Cost of freight per item
15  Landed cost of the product purchased in drop ship or special manner
16  Number of days to pay invoice in drop ship or special manner
17    
18 Initial gross margin of the product purchased in drop ship or special manner
19    
20  Quantity traditionally purchased
21    
22  Quantity ordered for drop ship or special manner
23    
24  Average quantity sold per month
25    
26  Current cost of money borrowed (Annual interest rate)
Detailed Analysis
39  Quantity on shelf 60 days after invoice - traditional
40  60 days after invoice, cost of product on shelf purchased traditional
41  60 days after invoice, new gross margin of product purchased traditional
42  60 days after invoice, change in gross margin on product purchased traditional
43  60 days after invoice, lost profit on remaining product purchased traditional
44  Quantity on shelf 60 days after invoice - drop ship or special manner
45  60 days after invoice, cost of product on shelf purchased drop ship or special manner
46  60 days after invoice, new gross margin for product purchased drop ship or special manner
47  60 days after invoice, change in gross margin on product purchased drop ship or special manner
48  60 days after invoice, lost profit on remaining product purchased drop ship or special manner
 
50  Quantity on shelf 90 days after invoice - traditional
51  90 days after invoice, cost of product on shelf purchased traditional
52  90 days after invoice, new gross margin of product purchased traditional
53  90 days after invoice, change in gross margin on product purchased traditional
54  90 days after invoice, lost profit on remaining product purchased traditional
55  Quantity on shelf 90 days after invoice - drop ship or special manner
56  90 days after invoice, cost of product on shelf purchased drop ship or special manner
57  90 days after invoice, new gross margin of product purchased drop ship or special manner
58  90 days after invoice, change in gross margin on product purchased drop ship or special manner
59  90 days after invoice, lost profit on remaining product purchased drop ship or special manner
 
61  Quantity on shelf 120 days after invoice - traditional
62  120 days after invoice, cost of product on shelf purchased traditional
63  120 days after invoice, new gross margin of product purchased traditional
64  120 days after invoice, change in gross margin on product purchased traditional
65  120 days after invoice, lost profit on remaining product purchased traditional
66  Quantity on shelf 120 days after invoice - drop ship or special manner
67  120 days after invoice, cost of product on shelf purchased drop ship or special manner
68  120 days after invoice, new gross margin of product purchased drop ship or special manner
69  120 days after invoice, change in gross margin on product purchased drop ship or special manner
70  120 days after invoice, lost profit on remaining product purchased drop ship or special manner
 
72  Quantity on shelf 150 days after invoice - traditional
73  150 days after invoice, cost of product on shelf purchased traditional
74  150 days after invoice, new gross margin of product purchased traditional
75  150 days after invoice, change in gross margin on product purchased traditional
76  150 days after invoice, lost profit on remaining product purchased traditional
77  Quantity on shelf 150 days after invoice - drop ship or special manner
78  150 days after invoice, cost of product on shelf purchased drop ship or special manner
79  150 days after invoice, new gross margin of product purchased drop ship or special manner
80  150 days after invoice, change in gross margin on product purchased drop ship or special manner
81  150 days after invoice, lost profit on remaining product purchased drop ship or special manner
 
83  Quantity on shelf 180 days after invoice - traditional
84  180 days after invoice, cost of product on shelf purchased traditional
85  180 days after invoice, new gross margin of product purchased traditional
86  180 days after invoice, change in gross margin on product purchased traditional
87  180 days after invoice, lost profit on remaining product purchased traditional
88  Quantity on shelf 180 days after invoice - drop ship or special manner
89  180 days after invoice, cost of product on shelf purchased drop ship or special manner
90  180 days after invoice, new gross margin of product purchased drop ship or special manner
91  180 days after invoice, change in gross margin on product purchased drop ship or special manner
92  180 days after invoice, lost profit on remaining product purchased drop ship or special manner
 
94  Quantity on shelf 210 days after invoice - traditional
95  210 days after invoice, cost of product on shelf purchased traditional
96  210 days after invoice, new gross margin of product purchased traditional
97  210 days after invoice, change in gross margin on product purchased traditional
98  210 days after invoice, lost profit on remaining product purchased traditional
99  Quantity on shelf 210 days after invoice - drop ship or special manner
100  210 days after invoice, cost of product on shelf purchased drop ship or special manner
101  210 days after invoice, new gross margin of product purchased drop ship or special manner
102  210 days after invoice, change in gross margin on product purchased drop ship or special manner
103  210 days after invoice, lost profit on remaining product purchased drop ship or special manner
 
105  Quantity on shelf 240 days after invoice - traditional
106  240 days after invoice, cost of product on shelf purchased traditional
107  240 days after invoice, new gross margin of product purchased traditional
108  240 days after invoice, change in gross margin on product purchased traditional
109  240 days after invoice, lost profit on remaining product purchased traditional
110  Quantity on shelf 240 days after invoice - drop ship or special manner
111  240 days after invoice, cost of product on shelf purchased drop ship or special manner
112  240 days after invoice, new gross margin of product purchased drop ship or special manner
113  240 days after invoice, change in gross margin on product purchased drop ship or special manner
114  240 days after invoice, lost profit on remaining product purchased drop ship or special manner
 

MAY 2024
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Small Business

AdvisorieS

The May Small Business Advisory is titled "Planning for a successful accountant" and is appropriate for many with the April 15 tax deadline having passed.

 

Did you work with your accountant? Or, did you just give them a bunch of papers and wait to receive a completed tax return?

 

Successfully working with an accountant requires a partnership. This month's Small Business Advisory gives suggestions of how to make this happen in 2024.

Small Business

News

Top Story

We see that many small business owners have too much of a focus on the "top line" of their income statement.

 

Increasing revenue is great, but it is not a cure all for any challenges your business is facing. And sometimes, incresing revenue can create a challenge.

Article of the Month

Who is your customer? Some small businesses have no focus. Their customer is whoever calls or walks in the door.

 

And some small businesses have determined which customers, in sufficient numbers, they should spend their efforts to attract.

 

The article of the month shares an old Southern rhyming couplet about business; "The bertter you niche, the more you get rich."


Book of the Month

Lean Startup by Eric Reis is our suggested book for May.

 

As the title suggests, the reader of the book would be someone that is starting their business. However, we see more value than just that.

 

Perhaps you have been in business for many years. We think this book could give insight to items, and methods, that a small business owner should think about with their business today.
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BOOK US

With over 25 years of frontline experience Tom Shay is America's leading Small Business Management Expert. He's a "Must Have" for your next event.

Small Business

Advisories

The May Small Business Advisory is titled "Planning for a successful accountant" and is appropriate for many with the April 15 tax deadline having passed.

 

Did you work with your accountant? Or, did you just give them a bunch of papers and wait to receive a completed tax return?

 

Successfully working with an accountant requires a partnership. This month's Small Business Advisory gives suggestions of how to make this happen in 2024.

Small Business

News

 

Top Story

We see that many small business owners have too much of a focus on the "top line" of their income statement.

 

Increasing revenue is great, but it is not a cure all for any challenges your business is facing. And sometimes, incresing revenue can create a challenge.


Article of the Month

Who is your customer? Some small businesses have no focus. Their customer is whoever calls or walks in the door.

 

And some small businesses have determined which customers, in sufficient numbers, they should spend their efforts to attract.

 

The article of the month shares an old Southern rhyming couplet about business; "The bertter you niche, the more you get rich."


Book of the Month

Lean Startup by Eric Reis is our suggested book for May.

 

As the title suggests, the reader of the book would be someone that is starting their business. However, we see more value than just that.

 

Perhaps you have been in business for many years. We think this book could give insight to items, and methods, that a small business owner should think about with their business today.

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Tom Shay
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