Sales and costs

Sales 1

Sales describes what a business sells and the money it receives for it. Denis van Beek of Nordsee Marine is having a sales meeting with her sales team :

‘Our sales figures and turnover(money received from sales) in the last year are good, with revenue(money from sales) of 14.5 million euros, on volume of 49 boats. This is above our target of 13 million euros. We estimate our sales growth next year at ten percent, as the world economy looks good and there is demand for our products, so my sales forecast is nearly 16 million euros for next year. I’m relying on you!’

Words

sales meeting n.

a meeting with sales people

sales figures or sales turnover n.

statistics showing the amount sold

volume /ˈvɒljuːm $ ˈvɑːljəm/ ★★★ S3 W2 n.

[countable usually singular, uncountable] the total amount of something, especially when it is large or increasing

The volume of traffic on the roads has increased dramatically in recent years.

sales growth n.

increase in sales

sales forecast n.

sales predicted in a particular period

Sales 2

Here are some more uses of the word ‘sale’:

a make a sale : sell something

b be on sale : be available to buy

c unit sales : the number of things sold

d Sales : a company department

e A sale : a period when a shop is charging less than usual for goods

f The sales : a period when a lot of shops are having a sale

Costs

The money that a business spends are its costs :

• direct costs are directly related to providing the product (e.g. salaries).
• fixed costs do not change when production goes up or down (e.g. rent, heating, etc.).
• variable costs change when production goes up or down (e.g. materials).
• cost of goods sold(= COGS or CGS) : the variable costs in making particular goods (e.g. materials and salaries).
• indirect costs, overhead costs or overheads are not directly related to production(e.g. administration).

Some costs, especially indirect ones, are also called expenses.

Costing is the activity of calculating costs. Amount calculated for particular things are costings.

Margins and mark-ups

Here are the calculations for one of Nordsee’s boats:

• selling price = 50,000 euros
• direct production costs = 35,000 euros
• selling price minus direct production costs = gross margin = 15,000 euros
• total costs = 40,000 euros
• indirect costs = 5,000 euros
• selling price minus total costs = net margin, profit margin or mark-up = 10,000 euros

The net margin or profit margin is usually given as a percentage of the selling price, in this case 20 percent.

The mark-up is usualy given as a percentage of the total costs, in this case 25 percent.

It is the end of this time : )