The Basics of a Product P&L

Posted by emarketingfreak under Marketing
From http://emarketingfreak.com 4129 days ago
Made Hot by: steefen on January 4, 2013 8:11 pm

Creating a P&L for all products that you sell will ensure the success of your small business. My favorite P&L template divides your inputs and factors into four sections: Retail Price Drivers, Product Margin Factors, Gross Margin Factors, and Profitability.

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Comments

Written by maolivie
4128 days ago

Just to be clear, there is a difference better a cash flow projection/income statement and a product P&L. Differences are:

1) Product P&L typically does not include projections of revenue or profit. The sole purpose is to see if a product is profitable or not

2) Income statement blends all of your business units/product lines together to forecast and view revenue/profitability. Therefore, cogs is blended, trade is blended, delivery is blended, etc.

3) Any kind of projecting that you do requires the need to discount future cash flow streams due to the time value of money. This is something not found on a product P&L, but on a discounted cash flow

With that said, it might be worthwhile to estimate how many units you will sell to determine what your penny/dollar profit would be, however, certain expenses don't roll up at the product level (amortizations, taxes, etc.) and therefore, best way to see total sales and profit/loss is the income statement or cash flow.

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Written by bigmoneyweb
4129 days ago

A profit and loss, or P&L, forecast is a projection of how much money you will bring in by selling products or services and how much profit you will make from these sales. In good times, you use it to ensure that there will be enough money coming in to exceed the costs of providing the goods and services so you can make a solid profit. In tough times, your P&L can play an essential role in showing you what kind of a plan you need to return to breakeven, so that you'll be able to survive until better times come. thanks for sharing.

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