You may have encountered the situation that a product you bought in an ordinary store is more expensive than the identical product offered at the factory outlet. The difference between these prices is due to a number of mark-ups. In order to get the product from the factory outlet to you via the final retailer, it has to be transported from the factory to a wholesaler, where it may be stored for a while, before transported again to a retailer, who takes on the task of distributing it to consumers. Some forms of transport may attract insurance cost, or handling cost, for example at ports. In National Accounts parlance, all these cost are referred to as margins. Finally, taxes imposed at various stages increase the price further.

Different organisations pay different prices. Some organisations do not pay product taxes such as GST. Some organisations buy some of their purchases from wholesalers and do not pay retail margins. Some organisations own their own railways and trucks and do not pay rail or road transport margins. Some organisations even own their own ship and do not pay water transport margins. However they may still pay stevedoring and port handling.

Prices that do not include any margins and taxes are called basic prices. After mark-up, they’re called purchasers’ prices.

In the MyBakery example, each of the purchases have been tagged to indicate whether margins and taxes are included or excluded.

The default setting has all the purchase items marked for inclusion of margins and taxes.

To exclude an item, simply use the mouse to click on the tick. The tick will be removed to indicate its exclusion.

All margins apply as a default unless you specifically exclude them. If you don’t know about your organisation’s margins and taxes leave them as the default which is all margins but no product tax (such as GST). The software will prompt you.

Next: Indicator selection and onsite impacts