Marketing Strategy

How to match sale and purchase stock if company give free goods?

(Last Updated On: June 15, 2018)

Query 1:

If any company gives offer, how to show it in sales, because it’s free . If shown, purchase and sales dó not match how to solve this problem it ?


Query 2:


If we are selling free goods. Purchase will be less than sales. how to manage this problem ?

Response:


Free goods or offer is generally given at particular quantity like 5, 10, 15, 20 etc or invoice amount. If you consider it free, then you are wrong. These are not free, these are to less your and company cost. first you need to understand purpose of free goods or offer. Purpose of free goods, we will discuss in last.

Purchase will be less than sale in only one condition. If you are getting free good without mentioning in your purchase invoice. And if you are getting free goods mentioned in invoice then you will not face any such type of problem. Free goods will cut down your costing only and will not effect any sale purchase balance or stock balance. In case company is not mentioning free goods in invoice then ask them to mention it in your purchase invoice.

One more case, if you are getting free goods without mentioning in invoice then give them further without mentioning in sale invoice but it is not ethical practice and it is not legal also. You should take free good mentioned in invoice and then you can sell it free or sell it at actual value of product.
If company will bill you, it will mention offer in its invoice. As like following example:

Example Sales Bill Format:

Sr.
Product
Pack
Mfg
Batch
Expiry
Qty.
offer/free good
MRP
Rate
Amount
1
OrthoZac Gold OIL
50 ml.
EH
OZ/103
जुलाई-18
320
32
120
29
9288

It is one example of format of billing invoice. Invoice format may vary company to company. It is for example purpose only. When you will enter this invoice in your account, you will also enter free goods/offers in it. It will be added automatically in your stock. Now you can bill your free goods also. It will reduce your product’s cost and will not interference in your sale and purchase stock.

How to match sale and purchase stock if company give free goods?

If you are getting 10+1 scheme at the the rate of 10/- per product. Then your actual purchase cost will be reduced to 9.09/- per product but in stock you will have have 11 product of this product. You can bill all 11 product to your party. So it will not cause any stock imbalance.

Take example of above invoice : 320 piece*29 =9288
You receive free goods : 32 piece*0 =0

Now you have total quantity of 352 piece and total amount you will pay for it is 9288.
If you calculate costing for per piece is 9288/352 = 26.38/- per piece.
When you enter this purchase invoice in your software. It will show 352 pieces in your stock with amount 9288/-.
If you are going to bill it without scheme to retailer or wholesaler at rate of 31.50/- per piece.

Example Sales Bill Format:

Sr.
Product
Pack
Mfg
Batch
Expiry
Qty.
Free Goods
MRP
Rate
Amount
1
OrthoZac Gold OIL
50 ml.
EH
OZ/103
जुलाई-18
352
0
120
31.5
11088/-

If you will give further free 10% scheme to retailer or wholesaler then it will be like this:

Sr.
Product
Pack
Mfg
Batch
Expiry
Qty.
offer/free good
MRP
Rate
Amount
1
OrthoZac Gold OIL
50 ml.
EH
OZ/103
जुलाई-18
320
32
120
31.5
10080/-

Free good or scheme will not cause any difference in stock. It will only affect your costing.

If you receive free goods without mentioning in invoice then it will cause difference in your sale/purchase stock. For maintaining your stock, you have to receive free good with mentioning in invoice.

Read more related to calculation: How to calculate Maximum Retail Price, price to retailer and price to stockist with any MRP?

Purpose of free goods and offer is not to provide you free goods but its purpose to reduce your cost per product and encourage you to purchase product in bulk. When you purchase in bulk, your costing should be reduced. It is not possible to give product at low rate at very small quantity and it also helps to provide their cost per product to big distributors if they purchase in bulk. Companies also get benefits from offer or free because it increases their profit as compare to sell product at lower net rate.
If company cost is 23/- per piece and it sell it to net rate of 29/- per piece with 10% free goods. Your cost per piece will be 26.38/- per piece but company selling rate will be 29-2.30= 26.7/- per piece. In this case, both franchisee or distributor and pharma franchise company get benefit in his profit.
Now if company sell it to 26.50/- per piece without scheme. No one will get benefit. Both Franchisee or distributor will have 0.12/- loss and company will have 0.20/- loss. Next time don’t bargain in net rates. Bargain with free goods. It will help both of you and company. Company can provide scheme or free goods at net rates easily.

Hope you find above mail useful…

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Full Time Blogger, Part Time Entrepreneur and Partial Time Helper for New Start-UP's in Pharmaceutical, Ayurvedic and Nutraceutical Sector. Contact him at pharmafranchiseehelp@gmail.com

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