A busy order book can look reassuring. But more sales do not automatically leave more money in the business. Marketplace fees, advertising, delivery and returns can all change what a sale actually contributes.
The useful question is: what do we retain from each product and channel, and is that enough to support the business?
Start with a consistent contribution calculation
For management reporting, a useful starting point is net sales less product costs, channel fees, delivery costs and attributable advertising. Decide how discounts, refunds and returns are treated, and apply those definitions consistently.
Be clear about VAT and the reporting period. Comparing channel sales based on order dates with figures based on dispatch dates can create differences that look like trading problems.
Separate product contribution from company profitability
A product can make a positive contribution while the company still makes a loss. Rent, salaries and other overheads still need covering.
If factory labour is already included in a product cost, do not deduct the same cost again in your company cost base. The important point is to define the treatment and avoid counting costs twice.
Keep historical costs historical
If a material rises from £2.85 to £3.35 per metre, applying the new price to every past order changes the reported profitability of earlier trading. Record effective dates and retain the cost basis used for each order.
Where a historical cost is unavailable, show that limitation. An estimate is more useful when it is clearly labelled.
Look beyond the advertising headline
Ad-attributed sales and return on ad spend can help assess a campaign, but they do not tell you its final contribution. Review product margin, fees and delivery alongside advertising spend.
Advertising may also support visibility and future demand. Record that commercial purpose, then assess the evidence over time rather than assuming every wider benefit has been proved.
Build a short, useful trading review
- Which channels and products are generating contribution?
- Where are fees, advertising or delivery absorbing more of the sale?
- Which figures are complete, and which contain estimates or missing costs?
- What action will we take, who owns it and when will we review the result?
Start with clear definitions and reliable data. A smaller report that leads to action is more valuable than a large dashboard that nobody trusts.
Explore Sales Forge’s commercial leadership support or discuss your reporting priorities.