Tracking Estimated Gross Profit at the transaction level helps provide sales managers and reps with key data for negotiating pricing with customers, for establishing pricing policy, and for establishing and tracking commission plans. With this feature set up, sales reps and managers will see the Estimated Gross Profit on Opportunities on up to Invoices.
With the same feature enabled, NetSuite also allows managers in purchasing, operations and pricing to display the Projected Value on Assembly Build records, which includes Estimated Cost of labor and services for sale, thus providing additional insight that Item Inventory Valuation reports cannot provide critical data for establishing product pricing policy, improving manufacturing process, and managing more profitable vendor relationships.
- Setup/Company/Enable Features/Transactions tab: “Gross Profit”
- Set Up Items: Select a Cost Estimate Type.
- This is different than the costing method, which drives true COGS. Cost Estimate Type is used by NetSuite only to determine the method by which you will define an Estimated Cost for establishing Estimated Gross Profit.
- Inventory and other Resale: Options include the Item’s Average, Purchase Price, Last Purchase Price, and Preferred Vendor Rate. Another option, Item Defined Cost, uses a separate value you provide on the Item record in the Item Defined Cost field. Finally, the Purchase Order Rate option will use the Rate value from the most recent PO, or a Special Order associated with the sales Transaction’s line item, such as Drop-Ship POs.
- Non-Inventory and Service For-Sale Items: Establish an Item Defined Cost.
- Assembly and Kit Items: Some of the same options are available as above, but you may choose Derived From Member Items. This establishes the Estimated Cost from that of each of its Member Items which often vary for an Assembly Item from Build to Build.