What is a good profit-to-sales ratio?

A profit-to-sales ratio above 25% is considered good. However, this is a rough estimate and can vary from industry to industry. What brands should rather focus on is how much their profit-to-sales ratio is improving every year compared to last year's percentage.

What does a 30% profit-to-sales ratio mean?

A 30% profit-to-sales ratio means that out of your overall profit, the profit derived from sales operations is 30%.

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Sales Mix Calculator

By Anisha N

Contributor

Reviewed by Abhinash J

Editor

Published: April 11, 2023

A sales mix calculator determines the contribution of different products to your organization’s overall revenue. The estimations are made in percentage to help businesses identify their top-selling products. Based on the outputs of the sales mix calculator, organizations can adjust their marketing mix.

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What is Sales Mix?

Sales mix is the blend of products or services that a company offers to its customers, which can significantly impact its overall profitability. Let’s take the example of a cafe. A cafe is primarily known for selling cold and hot coffee. However, it also sells cookies, cakes, ice-creams, snack items, etc., to engage the customers and ensure repeat-visit.

Similarly, software businesses with multiple product offerings need to track their sales mix to determine which products or solutions satisfy the customers and which require further modifications. By knowing its sales mix well, businesses can make data-driven decisions and focus on improving their selling strategies.

How to Calculate Sales Mix?

Here’s how you can calculate sales mix:

Sales mix = [ Sales quantity of a product / Total sales quantity of all products ]

Supposed, a business sells two products: A and B. The sales data for each product is as follows:

Product A: 100 units sold at $20 each

Product B: 400 units sold at $15 each

Total sales quantity = 100 + 400 = 500 units

Total sales revenue = [ (100*20) + (400*15)] = $8000

Hence, the mix of product A = 100/500 = 20%

Mix of product B = 400/500 = 80%

Hence, as per the present scenario, product B is a more profitable product for the organization, and the two actionable steps can be:

Increase the promotion of product B and try to increase its selling volume further.
Find out why product A has a lower sales volume

Why do Sales Mix matter?

SaaS businesses generally have more than one products to offer. Analyzing the overall sales is not always enough as they need to identify, on an independent level, which products address customers’ pain points and which products require further modification to become product-market fit.

By estimating the sales mix, sales managers will get a clear picture of which products have a key role to play in the overall revenue of an organization. This data can help them identify whether they want to make any adjustments to their current product line.

Free Resource

Sales Mix Calculator

Determine the sales mix of your products with this Excel/Google Sheet template. Determine the percentage of your total sales that comes from each product or category with our sales mix calculator.

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Frequently Asked Questions

What is sales mix?

Sales mix refers to the proportion or percentage of total sales attributed to each product or service a business offers.

Why is sales mix important?

The formula for calculating the sales percentage is simple. You need to divide the total sales of an individual item by the total sales of all products for a specific period and multiply it by 100.

Why is it important to calculate sales percentage?

Several factors can impact the sales mix, including changes in customer preferences, competition, pricing strategies, and marketing efforts.

How can businesses use the sales mix to improve their profitability?

Businesses can use the sales mix to optimize their product mix by focusing on the most profitable products or services and eliminating those not performing well. They can also use this information to make informed pricing, marketing, and inventory management decisions to increase profitability.

Is the sales mix the same as the product mix?

No, the sales mix and product mix are related but different concepts. The product mix refers to the range of products or services offered by a business, while the sales mix refers to the proportion or percentage of total sales attributed to each product or service in the product mix.