Tips for use
You can use the Profit Calculator by yourself but may need somebody from your financial department (if you have one) for sound financial estimates.
How to use
The Profit Calculator helps you to understand the profitability of your company. It may support you in your decisions for the strategy of your business. To be able to make these calculations you need to make some estimations. Follow the steps to complete your profit calculation.
Determine for which period you want to calculate the profit of your business. You can calculate the profit for a week, a month or a year. Longer than a year is also possible, but how longer the period, the less reliable the result will be.
To be able to calculate your profit you need to think about how you earn money. What are the products or services that you sell? For what do customers or partners have to pay? The item can be a product, but also a service. Write down these items for your business.
For each item estimate how many of them will be sold in your selected period. Write down how many times the product or service is sold.
Write down the price of one item. Determine how much money you will charge the customer for one product or one service. Do you sell individual products or services, or do you have package deals as well? If so make a different category and write down the item, numbers sold and price category for the package.
How much does it cost to make one product or deliver a service once? Determine the costs for creating just one item. Only including the costs that are variable, meaning those costs that only exist when a product or service is being made and sold. Think of materials, handling, production or labor. Write down the variable costs per item.
What are the costs regardless of the number of products made and sold? Determine the fixed costs of your business for your selected period. Think of loans, insurance, rent, gas, electricity, water or phones. Add the costs for people, rent, services and telecom in the Excel template and add any additional fixed costs items.
The Profit Calculator will give you three results: total revenues, total costs and the profit. The total costs are the sum of variable and fixed costs. The profit is calculated by subtracting the total costs from the total revenue.
Remember that the Profit Calculator only provides an estimation of your company’s profits. It simply shows if you could make some profit based on your estimations. With the Profit Calculator you can play with prices, costs and sales volumes to see how much you need to sell to make a profit.