How To Calculate Recurring Margin in Sage 100 | Arithmix

Calculating recurring margin is an essential part of any business that offers recurring services or products. It helps you determine the profitability of your recurring revenue streams and make informed decisions about pricing and cost management. In this article, we'll discuss what recurring margin is, when it's valuable to calculate it, and how to calculate it.

What Is Recurring Margin?

Recurring margin is the profit earned from recurring revenue streams. It's calculated by subtracting the cost of goods sold (COGS) from the recurring revenue. COGS includes all the costs associated with producing and delivering the product or service, such as labor, materials, and overhead. Recurring revenue includes all the revenue generated from ongoing subscriptions, contracts, or services.

For example, if your business offers a monthly subscription service for $100 and the COGS for each subscription is $50, your recurring margin would be $50 per subscription. This means that for every subscription sold, your business earns $50 in profit.

When Is It Valuable To Calculate Recurring Margin?

Calculating recurring margin is valuable for businesses that offer recurring services or products. It helps you determine the profitability of your recurring revenue streams and make informed decisions about pricing and cost management. By understanding your recurring margin, you can identify areas where you can reduce costs and increase profitability.

Recurring margin is also valuable for businesses that are looking to grow their recurring revenue streams. By understanding the profitability of your existing recurring revenue streams, you can make informed decisions about pricing and marketing strategies to attract new customers and increase revenue.

How To Calculate Recurring Margin

To calculate recurring margin, you need to know your recurring revenue and COGS. Here's the formula:

Recurring Margin = Recurring Revenue - COGS

Let's use the example from earlier. If your business offers a monthly subscription service for $100 and the COGS for each subscription is $50, your recurring margin would be:

Recurring Margin = $100 - $50 = $50

This means that for every subscription sold, your business earns $50 in profit.

It's important to note that recurring margin should be calculated on a regular basis, such as monthly or quarterly, to ensure that your business is staying profitable and making informed decisions about pricing and cost management.

In conclusion, calculating recurring margin is an essential part of any business that offers recurring services or products. It helps you determine the profitability of your recurring revenue streams and make informed decisions about pricing and cost management. By understanding your recurring margin, you can identify areas where you can reduce costs and increase profitability, and make informed decisions about pricing and marketing strategies to attract new customers and increase revenue.

How Do You Calculate Recurring Margin in Sage 100

Sage 100 itself isn’t naturally geared towards letting you calculate complex metrics like Recurring Margin. As an alternative, teams typically use products like Arithmix to import data from Sage 100 and build out dashboards.

What is Arithmix?

Arithmix is the next generation spreadsheet - a collaborative, web-based platform for working with numbers that’s powerful yet easy to use. With Arithmix you can import data from systems like Sage 100, combine it with data from other systems, and create calculations like Recurring Margin.

In Arithmix, data is organized into Tables and referenced by name, not by cell location like a spreadsheet, simplifying calculation creation. Data and calculations can be shared with others and re-used like building blocks, vastly streamlining analysis, model building, and reporting in a highly scalable and easy to maintain platform. Data can be edited, categorized (by dimensions) and freely pivoted. Calculations are automatically copied across a dimension - eliminating copy and paste of formulas.

Arithmix is fully collaborative, giving your entire team access to your numbers and the ability to work together seamlessly.

Calculating Recurring Margin in Arithmix

Calculating metrics like Recurring Margin is simple in Arithmix. Once you've created your free account, you’ll be able to import your Sage 100 data, and use it to create natural language formulas for metrics like Recurring Margin.

Arithmix is designed to give you the power to build any calculations you want on top of your Sage 100 data, while also being easy to use and collaborate on. You can share your dashboards with users inside and outside of your organisation, making it easy to empower your whole team.