How to Calculate Profit Margin in Pharma Franchise Business?

How to Calculate Profit Margin in Pharma Franchise Business? –  Every business is motivated by the fact of earning better profit opportunities. The fall and rise of every business or enterprise wholly depend on the profit earning or losing capacity. One such arena is a profit margin. For every new pharma franchise business, you try to start or take into consideration needs to know how to calculate profit margin in pharma franchise business.

The pharmaceuticals industry shares a whopping 5% of share in GDP making it one of the best industries to join for better opportunities. The industry stands third global when it comes to volume. With an ambitious project of attaining the Pharma vision view, the pharmaceuticals industry has been a breeding ground for good growth opportunists and profit-making firms. Want to know how to calculate profit margin in pharma franchise business? In this article by Pax Healthcare, we will be sharing our insights to all the factors and calculations procedures one must know.

How to Calculate Profit Margin in Pharma Franchise Business?

Factors Affecting the Profitability of Pharmaceuticals Franchise Business

The business environment is affected by a multiple of factors at a time on different periods. If you are thinking of starting a new and a good business, then you should consider a lot of factors which will help in guessing your profit margin accurately. The influential factors are as follows:

  • The franchise offers monopoly which makes it a good deal. This is in the case of a particular company selling a generic drug with branded license. Thus, take a good closure of all the competitors selling medicines, drugs or products of same generic range surrounding your marketplace.
  • The strength of demand is very important as the customers will bring the sales at its target and will bring the growth of profits you want.
  • Goods and Sales Tax (GST) is the new shaker of the economy of India. It will be affecting the pharma industry of India. Know more about it, in order to know the profit margin better.
  • You should be aware of the relative costs which tend to lower the profit. It is best to study about your demographics and accessible resources like electricity, rent, labor etc.
  • Price discrimination seems a cruel thing for franchise owners but can be profitable for you. It is best to know the best alternative substitutes for different medicines and drugs. A good research work will help know the best profitable franchise business for medicines.

Profit Margin

Step-To-Step for Pharma Franchise Owners to Calculate Profit Margin

Get in touch with steps on how to calculate profit margin in pharma franchise business. They are as follows:

  1. Calculate the revenue of your business. it is the total sale of goods or service in particular period. (deduct the discounts and returns)
  2. Expenses that you have made in that period should be deducted with the revenue you attained. (Expenses are the cost you paid or incurred during that passage of time on your business like labor cost, rent, electricity etc.). This will leave you with your net income/ profit of that period.
  3. Add 10+ 1 or 10+ 2 (if) and deduct the doctor’s share under Price to Retailer (PTR), stockiest, commission etc.
  4. Take out the profit margin of this formula:

Profit margin: Net Profit or Income / Revenue or

Image result for Profit Margin formula

This is the % of revenue that is the profit margin.

  1. You will be left with a realization amount.

The profit margin shares a completely different platform with other companies of similar services. even if the revenues and expenses may be low but the % can vary with the company to the company owning to the difference of rules, regulations, demand etc.

Conclusion

Being a businessman, profit margin knowledge is very important. Pax Healthcare Pvt. Ltd. is a popular pharma franchise company in Chandigarh who offer genuine and profitable franchise deals all over India. Our company owns a huge list of pharma products which are affordable and made from superior quality extracts and ingredients. We will happy to serve you.