Profit Goals are the net profits you and your team want to achieve for each crop marketing plan. The Profit goals are expressed per area unit e.g. hectare, acre,...
Get the help of your accountant or other expert if you are not sure how to get your net profits. Net profit is the money left over after paying the total break-even cost for a season. The net profit percentage is the net profit divided by the total break-even cost for a season multiplied by 100.
The total break-even cost includes all of a crop’s costs for a season which can be broadly categorised as direct production costs, indirect production costs and foreign factor costs such as management, rent, interest, etc.
- CropsProfit works with a Lowest Profit Goal, it is the minimum net profit (compared to your historic profits) you are prepared to make before you start selling some of a crop. You are also asked what % of a season’s total harvest you are prepared to sell in a Marketing Cycle (e.g. week). Typically around 1% to 2% is used but you can choose for yourself.
- There is also an Ideal Profit Goal which is the profit (compared to your historic profits) you will be happy to sell your crop for over the long term. You are also asked what % of a season’s total harvest you are prepared to sell in a Marketing Cycle (e.g. week). Typically around 4% to 6% is used but you can choose for yourself.
- Setting accurate levels for your Profit Goals by looking at your historic profits is important, then CropsProfit can guide you to improve your profitability. This is especially true the first time you start using CropsProfit.
- As the market price changes over a season and your season’s Lowest Profit goal is reached, CropsProfit will start giving you transaction suggestions called “Aim for the marketing cycle”. This aim is based on all of that specific season’s settings, you can decide to do that transaction or not.
- To make it easy to know if you have a transaction to do you will see a red dot on a season’s name on the Home page, just follow the dots until you get to the Transactions page.
- It is very important that you understand and be comfortable with the levels of your Profit Goals. To gain more confidence you can also test the levels of your Profit Goals on CropsProfit by opening a demo crop marketing plan or creating your own historic seasons with your own total break-even costs and other data.