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Definition
Product Profitability
• Product profitability, simply defined, is the difference
between the revenues earned from, and the total costs
associated with, a product over a specified period of
time.
• Single source of product data that can be utilized across the enterprise to facilitate a
true common reporting platform for product profitability
• Provide ‘what-if’ analysis for changes in the cost base allowing for re-forecasting and
preparation for changeable commodity markets
• Identify areas of growth in margin not just in revenue and accurately forecast
profitability of new products and proposed product mixes
Profit Parameters
12,000,0
00
9,000,00
0
6,000,00
0 Profit
3,000,00
Area
0
1,000,000 5,000,000 7,000,000
3,000,000
- Loss
3,000,00 Area
-
0 Break-even
6,000,00
- Point
0
9,000,00 3,000,000
0 Fixed Pens
Expenses
Rs.9,000,000
Absolute Profitability
Segment A Segment B