Use the right inputs
Retail price alone says almost nothing about economic performance.
- Units sold, gross sales, discounts, refunds, and net sales.
- Landed unit cost including freight or acquisition fees when material.
- Waste, expiration, samples, shrinkage, and treatment-room use.
- Payment fees, commissions, and other variable costs attributable to sale.
Calculate core measures
Use consistent definitions so one product can be compared with another.
- Gross profit = net sales minus cost of goods sold.
- Gross margin percentage = gross profit divided by net sales.
- Contribution profit = gross profit minus attributable variable selling costs.
- Inventory turnover = annualized cost of goods sold divided by average inventory at cost.
- Inventory ROI = contribution profit divided by average inventory investment.
Interpret rather than celebrate
A high margin product can still be a poor investment if it sits, expires, or requires heavy discounting.
- Compare margin and turns together.
- Separate retail sales from clinical-use consumption.
- Review discounts and refunds by provider and channel.
- Investigate variance before changing the theoretical cost.
- Use the product ROI calculator to model price, cost, volume, waste, and fees.
Clinical and operational references
Use this guide as an operational starting point, not legal or medical advice. Clinic requirements vary by jurisdiction, services, licensure, and scope of practice.