New Pharma Policy is hot issue in pharmaceutical sector now days. There are many rumours circulating in industry about new pharma policy. Some may be true and some may be false. Most concern rumours are Banning of Contract and Loan License manufacturing, Fixing of Trade margins and removing brand name from single salt preparations. In this article, we are going to discuss about trade margin fixation. If trade margin has fixed then what could be it. Here we are taking the reference of Draft National Pharmaceutical Policy, 2006. Trade margin is complex phenomena and has been the subject of intense debate from time to time. Everyone has own views in this matter. If government fix trade margin then there is maximum possibility, it would be as described below:
Fixation of Trade Margins in Pharmaceutical Sector:
In case Trade Margin is to fixed then the trade margins for different drugs would be:
Drugs under price control (DPCO):
For Both Branded and Generics Drugs
Wholesaler Margin: 8%
Retailer Margin: 16%
For Other Drugs(Not under Price control):
For Branded and Branded generics
Wholesaler Margin: 10%
Retailer Margin: 20 %. For Generics
Wholesaler Margin: 15%
Retailer Margin: 35%
All margins would be calculated on the MRP of drug or trade rate.
I am Anoop Rawat calculating as per your formula. PTR and PTS example given below: Product MRP 60/- Rs GST 18% Slab,
GST 60*100/100+18=6000/118=50.84 PTR 50.84*100/100+20=5084/120=42.36 GST 18%=7.63 PTS 42.36*100/100+10=4236/110=38.50 This is PTS. Our Question is How to Calculate Net Rate because GST include Net Rate. I Know the net rate. Some body provide me. So help me How to calculate Net rates? Response:
Calculating MRP, PTR and PTS you can check at our article: How to calculate MRP, PTS and PTR?
Net rates are calculated based upon the cost and profit margin at the product. Net rates calculation doesn’t depend at MRP of product but MRP calculation depend at Net rates.
Net Rates are calculated as per formula: Cost x %margin + %GST (If net rates are inclusive of GST). If you are marketing company, Cost is calculated on the basis of Formula: Cost= Third Party Rate + Transportation + Other Expenses + % Profit Margin
Sir I used to import protein powder and several other multivitamin from India. Previously i used to import from local party of —— (India) . Now i am including few item from Delhi buddy. My question is I have imported goods in IC 30 and MRP is IC 250. Please sir let me know how can i managge margin in distribution of goods . In nepal stockist margin is 10% and retail Margin is 16% plus i am planning to give 10% bonus.. Please let me know how can i manage distribution margin. Thank you.
MRP is 250/- Retailer margin: 16% Stckiest Margin: 10% Bonus: 10% IC is 30/-
You didn’t mention tax structure so we are mentioning including of Tax price here. First we have to calculate from retailer margin because retailer sell it at mrp.
Stock Register may be define as document/file/software record which is used for maintaining company’s stock. It is based upon live updated of addition of incoming stock (Purchase) and subtraction of issuing stock (Sale). It is an important aspect for any business for Inventory management, preventing shortage problem and maintaining regular supply of products.
Managing Stock could be an integral part of managing a company. For small companies or in new start-ups, its a big challenge due to shortage of staff specially in pharma field where huge number of products present. Stock management involves receiving, stocking and dispatching etc. There are many types of stock management but few methods are commonly used. Commonly used methods are:
Manually Stock Register Book
Stock Management in Excel
Automatic Software is best possible way to maintain stock in pharmaceutical or any other sector which has large number of products. Manual hand written stock book is also managed by many small and macro sized pharmaceutical companies. It is time consuming process and one person is required to maintain only stock which may be costly for start-ups. Stock management in excel is tricky work but up to a certain level of products, you can manage it easily and freely.
We are committed to provide free tools for your company management system, so we are providing you a quick and easy way to maintain your stock in Microsoft excel. Basic parts are same in all form for maintaining stock. These parts are as follow or you can fix it as per your need.
Manual Stock Register
Here we are embed excel sheet for your reference. We have mentioned Products as Product 1, Product 2, Product 3 to Product 10 and Link it to worksheet that contains detail of that product. You can create your own Stock Management Register in Excel by Following Formula’s and ways. First Check our Example here:
Step by Step Demo:
Open Microsoft Excel Sheet
Create Work sheet of Each Product as we have mentioned like Product 1, Product 2, Product 3 etc. Create according to number of products available to you as indicated in Snap shoot below:
Make a Index in above cells of your Sheet. Make it in first work sheet and prevent time by copy/pasting to all worksheets. Check Snap shot below:
Make a title bar containing all details like Date, product name, bill number, issue, receive etc column wise as shown in snap shoot below:
Create hyperlink to each product name with its work sheet of that product. Click at column of that Product Name. Press Ctrl + K. Choose Place in this Document and Select work sheet of name as shown in snap shot below:
Dispatch Register is an important documents in any company. In Dispatch Register, all details regarding documents sent, parcel sent or other material sent through courier, post or transport is noted down for future aspect and proper follow-up. Dispatch Register is as important as stock register.
Dispatch register can be maintained by following ways.
In Hand written Book/Register
In Microsoft Excel
Here we are going to provide you in detail about Dispatch register in Excel. Excel is free and easy tool for maintaining Dispatch Register. A brief discussion about dispatch register in Book and Software.
Hand Written Book:
Hand written book are easily available at book stores nearby you. You can note down all dispatch details manually in it. Written in these books was boring for us. To outcome from this we chose to prepare a excel format for dispatch register that we are sharing with you. Software is costlier one, we couldn’t afford this that time.
One single software can fulfill all your need from purchase to dispatch. But it may be costlier for many new comer entrepreneurs. There are many software available that can fulfill your all needs. These works can be done as online and offline both. Check list of Software for preparing dispatch register
Dispatch Register in Excel Format:
Dispatch register in excel can work as free software for you. You can maintain Order, Purchase, sale, attendance and many other things other than Dispatch in Excel. One more advantage is that you can easily customized it as per your need. Generally products or documentation are sent through courier, post or transport/logistic. Few other means for delivery may be Railway, Air, Cargo etc.
We have divided Dispatch Register in Two Parts. You can make two sheet in single excel file for easy navigation. We can divide dispatch register as follow:
Courier Dispatch Detail
Transport Dispatch Detail
Courier Dispatch Register:
Courier Dispatch Detail may contain following Parts:
Serial Number (Sr. No.)
Docket number ( Doc. No.)
Example of Courier Dispatch Register:
COURIER DISPATCH REGISTER
Courier Dispatch Detail
Down Excel Dispatch Software for Free by clicking here
Transport Dispatch Details:
Transport Dispatch detail may contain following details:
Serial Number(Sr. No.)
You can also customize this section as per your requirement.
This will indicate number of courier/transport sent in a particular time period i.e. Week, month, quarter or year. Give a serial name as weekly or monthly or as required basis.
Date section will necessary to find out at which date you send courier/transport to which sender. It will help you to remind date of material/document sent.
3. Party Name:
This will help you to remind at which receiver you have sent courier/transport at which date.
At destination column, you can add place where you sent your courier/transport.
5. Docket Number/Bility Number/Gr. Number:
Every transport or courier will provide a unique number against goods he received. This number is used to locate the position of goods/document you send to that courier/transport. Same this number for any future reference or till goods/document is received at destination.
6. Courier/Transport Name:
There are number of courier/transports present to deliver the goods. At different locations, different transport/courier has better service. Send to the courier/transport which has better service at that destination. Note down courier/transport name for your reference.
Few Good Couriers Name are: DTDC , Trackon, Overnite, First Flight, Blue Dart etc.
Few Good Transports Name are: Safe Express, TCI, XPS, Gati, Nitco, VRL, Om logistic etc.
7. Number of Cases:
In case you have sent more than one case to transport/courier, you will need to note down the number of case present in consignment.
You will pay to courier or transport at basis of weight of that material or as per discussed. Note down weight to calculate total due of courier or transport at end of week/month.
At remark section, you can note down any other information you need to note down.
Hope above information is helpful to you…
Mail us at email@example.com for any query and suggestions
You have informed in your article, margin to retailers would be 20%, but recently one retailer said very confidently, that according to rule, retailer margin must be 23.8%, he threaten me to do complaint from drug inspector as I am giving him margin 20% of M.R.P( M.R.P-20%-5%discount+5%tax),
Please guide me what is rule as per law.
I am giving direct supply to Retailers.
In Article How to calculate Price To Retailer, Price To Stockist and Maximum Retail Price?, we will supposing all margins and taxes. They can vary place to place…
First of all I want to inform you that What margin you give to retailer doesn’t come under Drug Inspector’s reach. If you give him 15% margin only, then also DI can’t interfere in this matter.
May chemist/retailers union has fixed certain margin from their self but he can’t threaten you to complain to drug inspector. Its your wish to fix margin of retailers. Some wheres all retailers fixed their margin and don’t work less then it. Generally it varies from 18-25 percent.
Drug Inspector can collect sample, ask for invoice, from where you purchased, sale report, check documentation or any other formalities related to drug quality, efficacy, standards etc. Not related to margin or taxes. Taxes come under Sale tax Department.
Thanks for giving right guidance to me, can you tell me about salts, which are banned or going to be stop, & one thing more, please inform about schuedule H1 drugs.
What is Maximum Retail Price (MRP)?
Maximum Retail Price (MRP) is the maximum price of any product at which a product/service can be sold out to consumer. It is final maximum cost that a consumer has to pay to purchase any product/service. It is inclusive or all taxes.Some persons ask about how to calculate GST at MRP?
Maximum retail price is inclusive of all taxes. It is the final/maximum price that could be paid by customer. No one can increase MRP or sell products at higher rates than its MRP. Companies fixed maximum retail price so that they can compete in market as well as earn enough profit to run their organization smoothly.
How to Calculate Maximum Retail Price (MRP)?
Different companies have different formula for calculating maximum retail price. Mostly MRP is fixed according to market trend but following formula can be used to calculate maximum retail price (MRP). This MRP calculation is considering as per Vat/Tax only. In case of cst and excise duty, there may be change in MRP. We are considering manufacturing cost inclusive of excise duty and cst if any.
Suppose if any company is manufacturing a product at rate of 25/- per pc. Then MRP can be fixed according to above formula.
Packing Material= 2/-
Margin 25%= 25*25/100=6.25/-
Total Cost=25+2+6.25=33.25/- in round figure we take it 34/-
CnF margin 6%=34*6/100=2.04/- now amount is 34+2.04=36.04/-
Stockiest margin 10%=36.04*10/100=3.60 i.e. 36.04+3.60=39.64/-
Retailer Margin 20%= 39.64*20/100=7.93 i.e. 39.64+7.93=47.57/-
This is not PTR or PTS. This is general calculation for MRP. Tax and transportation will cost at every step e.g. when supply from manufacturer to CnF, CnF to stockiest, stockiest to retailer. PTR and PTS have different procedure of calculation.
Tax is ultimately paid by last consumer. Minor difference in tax is occurred during every transaction but we can leave these differences because these are negligible. Suppose GST is 5.25%.
GST 5.25%= 47.57*5.25%=2.50 i.e. 47.57+2.50=50.07/-
Transportation from manufacturer to CnF is 50 paisa per pc
Transportation from CnF to stockiest= 50 paisa per pc
Transportation from stockiest to retailer= 30 paisa per pc
Whole transportation= 1.30/- per pc
Marketing/Advertisement expenses= 10/- per pc
Other expenses= 3/- per pc
Total expenses= 13/- per pc
Grand total cost= 50.37+13=63.37/- in round figure is 64/-
Maximum retail price = 25 (MC) + 2 (PC) + 6.25 (M) + 2.04 (CFM) + 3.60 (SM) + 7.93 (RM) + 2.50 (GST) + 1.30 (T) + 13 (E) = 63.62 in round figure is 64/-. MRP could be less or more depend upon change in cost, margin, transportation, tax etc.
One should be careful while fixing MRP for any product. It can make difference in your market presence. MRP should neither be as low as one couldn’t get enough profit to run company nor as high as one couldn’t compete with competitors. Above calculation is for example purpose only, one can use his own method to calculate MRP.
Excel Sheet Calculator for MRP calculation, PTS calculation and PTR calculation
Download MRP/PTS/PTR Calculator
Specific Examples to understand MRP/PTS/PTR calculation
Kindly explain to me MRP ,PTR and PTS calculation regular all product 5 % GST product and mail to me at my mail. What does it mean PTR and PTS in sales & marketing? How does companies calculate product’s MRP’s.
Companies calculation to fix MRP depend upon many Factors:
Manufacturing Cost of Product (Infrastructure cost, salary and wages, production cost, development, Testing, Packaging etc.)
Here we are going to discuss general calculations to fix MRP/PTS/PTR. Hope it will be helpful for you. You can calculate these things from any Goods and Service Tax (GST) value. Just replace 5% GST from your product GST value. Gst is divided into four slabs i.e. 5, 12, 18, 28 %.
MRP: MRP means Maximum Retail Price. It is the price at which customer will purchase any goods/services. It is inclusive of all taxes (GST).
PTS: PTS means Price to Stockist. It is the price at which any company will give its goods to stockist or distributors. It may be inclusive of GST or not.
PTR: PTR means Price to Retailer. It is the price at which retailer will purchase goods from stockist or distributors. It may be inclusive of GST or not.
First we start with Maximum Retail Price followed by Price to Retailer and Price to Stockist.
Maximum Retail Price(MRP):
Maximum retail price may be defined as the final maximum cost paid by an end consumer for any goods/services.A good and/or service may be sell out less than from its MRP but can’t be sell out more than its MRP. MRP is inclusive of all taxes and no further taxes could be added in this unless specified.
Maximum Retail Price calculation is almost same of all sectors and industry. Few minor changes may be vary according to industry and distribution channel. (Like In case of pharma franchise marketing, C&F and pcd/Franchisee may be same and/or different. )
PTR/PTS/Cnf margin is calculated below in article. Tax and transportation will cost at every step e.g. when supply from manufacturer to CnF, CnF to stockiest, stockiest to retailer. Tax is ultimately paid by end consumer. Minor difference in tax may occur during every transaction but we can ignore these differences because these are negligible. Suppose GST is 5%.
Transportation from manufacturer to CnF is 0.50/- per piece. Transportation from CnF to stockiest= 0.50/- per piece. Transportation from stockiest to retailer= 0.30/- per piece. Total Transportation Cost= 1.30/- per piece. Marketing/Advertisement expenses= 14.50/- per pc. Other expenses= 3/- per pc
MRP could be less or more depend upon change in cost, margin, transportation, tax etc.
One should be careful while fixing MRP for any product/service. It can impact at product/service market’s presence. MRP should neither be as low as it couldn’t get enough profit to run company nor as high as it couldn’t compete with competitors. Above calculation is for example purpose only, one can use his own method to calculate MRP.
Calculating PTS/PTR value exculded of GST (For Registered Person Under GSTIN):
Suppose MRP(Maximum Retail Price) is 100/- per strip (inclusive of GST)
Retailer Margin: 20%
Stockist Margin: 10%
Following calculation is useful in pharma industry as well as other industries:
Calculate it from opposite side:
MRP is 100/-
GST is 5%
Now deduct government GST from MRP i.e. remaining price after GST is MRP*100/(100+percentage as mention) i.e. 100*100/105=95.24.
GST= 4.76 .
That is total GST that will go to Government’s gst department. Minor difference of gst will occur when you will bill to stockist and stockist will bill to retailer. That can be ignored and put this gst as standard. Every party will pay only that gst and this gst will be paid finally by customer. All other will get their gst refund from party they will bill.
You can calculate any PTS/PTR online in below sheet. Just Change MRP Value and other values in Yellow color as per your need and wait for few seconds. You will get calculation online…
Price to retailer is calculated as per profit percentage you are going to give him i.e. generally nearly 20% or some time with scheme or may increase or decrease. Price to retailer will be approx. 79.36 plus 5% gst. As it should be nearly 83.32 to retailer.
If retailer sell it to customer with MRP 100/- then he gets approx. 20% profit. In case if he will take 5% gst from customer, he has to bill this product at 95.24/- plus 5% gst. GST will be compensated and Difference between 95.24-79.36= 15.88/-.
Then profit of retailer is 15.88*100/79.36=20.01%. You can further less or up profit of retail by increasing or decreasing it’s selling rate or percentage of margin.
PTS(Price to Stockist):
Now calculate price to stockist: Formula is Amount*100(100+margin of Stockist) i.e. 79.36*100/(100+10)= 7936/110=72.15/-
Price to stockist is calculated as per given profit percentage i.e. 10% in most of cases. May be high or low depend upon company or product, you are working. Price to stockist should be get product at 72.15/- plus 5% GST.
It will be nearly 75.76/- to stockist. Gst will be compensated with gst of retailer. Hence, 79.36-72.15=7.21/-. Here profit of stockist is 7.21*100/72.15=9.99% i.e. nearly equal to 10%.
Now you can calculate PTR or PTS at any MRP by this formula. Same you can apply to your c&f prices and net rates….
Calculating PTS/PTR value inclusive of GST (For Unregistered Person Under GSTIN):
Unregistered persons can bill to retailer as per calculation mentioned above. But they can’t mention or collect GST from retailer. They can issue invoice to retailer inclusive of GST without mentioning GST rate. For example MRP is 100/-
Retail Margin is 20%. GST is 5%. They can’t collect GST directly by mentioning GST in Invoice. They can invoice at PTR inclusive of GST. They can bill to retailer by calculating PTR(inclusive of GST) as follow:
PTR: MRP/(100+retail margin) x 100
= 100/120 x 100= 10000/120= 83.33/-
In This rate Retailer price 79.36/- plus 5% GST will be included. An unregistered person is not authorized to collect the tax, so they can’t add GST column in their invoice and have to bill inclusive of GST.Like wise PTS will be calculated.
PTS: PTR/(100+Stockist margin) x100 = 83.33/110 x 100 = 8333/110 = 75.76/-
In This rate Stockist price 72.15/- plus 5% GST will be included. An unregistered person is not authorized to collect the tax, so they can’t add GST column in their invoice and have to bill inclusive of GST.
More Examples at Request by our Reader:
How can calculate MRP, PTR AND PTS kindly explain. Urgently message for one example with MRP 95.
If mrp is 95 Deduct 5% gst first Then calculate ptr and pts by following formula Amount*100/(100+percentage). Here you can place MRP, PTR and PTS in place of amount to calculate particular price.
Remaining then deduct 20 percentage of retailer margin
This is PTR (Price to Retailer)
Now 75.90×100/110 = 68.53
This is PTS(Price to Stockist)One more example if mrp 57 then what will be ptr and pts
Deduct gst as applicable. We are considering 5% Then actual mrp will be after excluding of gst is 57×100/105= 54.28
Calculate PTR by formula is 54.28×100/120=45.23
Pts is 45.23×100/110= 41.11We can calculate ptr and pts with including of gst or excluding of gst. Both above example is excluding of gst what we had deducted in starting At every stage gst is added with invoice. But actual gst is paid by consumer. All middle men don’t pay gst from their pocket. They get it from next one in supply chain. There will be minor increase in gst during supply from company to c&f, c&f to distributor or distributor to retailer but this amount could be neglected during calculation.
How to derive the price list for if :
MRP is Rs.295/- including GST 5%
Stokiest Margin-6 %
Distributors margin 8%
Retailer Margin 15% on MRP
I will be thankful if you help me out.
MRP is 295/- included Gst. Calculate it in reverse direction. it will be more easy.
Now calculate Price to retailer (Included Gst) First:
Formula is Rate/MRP *100/(100+margin)
Calculate Price to Distributor(Included Gst): 257*100/(100+8)=257*100/108= 237.96 i.e. 238
Price to Stockist (Included Gst) will be 238*100/(100+6)=238*100/106=224.53 i.e. 225/-
If want to calculate without Gst then deduct 5% gst from mrp first and then calculate all as shown in this article.
I would like to know the formula of PTR or TRADE PRICE of pharmaceutical company . How to calculate trade price or ptr.
I am a distributor /wholesaler of pharma company.
These are the pharma company net rate and mrp
Rs. 11 net rate, 44.30 mrp
Rs.7.75 net rate, 16.50 mrp
Rs. 10 net rate, 32 mrp
Rs. 13 net rate, 42 mrp
Rs. 16.5 net rate, 65 mrp
Rs. 18 net rate, 80 mrp
Rs. 23 net rate, 80 mrp
Rs. 7 net rate, 35 mrp
Rs. 9 net rate, 44 mrp
Rs. 32 net rate, 150 mrp
Read in detail at How to calculate trade price or Ptr?
Formula is MRP(Rate)*100 divided by (100+Percent of margin)
PTR or Trade rate is calculate by above formula: (Supposing retailer margin is 20%)
44.30*100/(100+20)= 4430/120 = 36.92/-
16.50*100/(100+20)= 1650/120 = 13.75/-
65*100(100+20)=6500/120=54.17/- same continue as
Hope you have found this article helpful. If you have any another method for calculating ptr and pts, you can share with our readers through comment or mail. We will update our article with better way of calculating. Please revert with your suggestions and queries at firstname.lastname@example.org
We hope if you have visited this page, you have Decided to start pharma/ayurvedic franchise/pcd marketing Before start you want to know- how much you can earn through pcd pharma and franchise marketing. Unlike other business, this business don’t have fixed percentage margin. How can you earn from it depend at your selling skill.
Raw material cost is basis of net rate calculation. Pharma Franchise or PCD companies provide medicines to their franchisee, at net price basis.Net Prices are calculated by following formulas: Total Cost = Manufacturing cost + Packing Material Cost + Taxes + Transportation + Promotion Material + Expenses. Net Rate = Total cost X percentage of margin.
Percentage of margin may differ from companies to companies. Percentage of margin is calculated according to number of employees, administration expenses and other expenses of company. Pharma franchise or PCD Companies provide visual aids, catch covers, leaf behind cards, bags, writing pads, dairies, calendars, pens and number of promotion inputs. That’s way their prices are higher than generic drugs. And doesn’t do direct marketing, hence, prices fall below branded drugs.Companies have calculated their rates at which they will sell to their customers. Then their franchisee’s turn to fix their margin according to their cost and expenses. Transportation between companies to party also causes expenses hence we will calculate this expense into franchise distributor costing.Suppose if a Franchisee Distributor purchase a particular medicine at the rate of 10 Rs with a MRP’s of 35 Rs and after include with transportation and tax, it will be increased by 10% and become 11 Rs.
How will he calculate distributions of margins?
20% margin with scheme (10% of free goods or whatever applicable) will go to retailer, even more in some cases. After giving 20% + scheme to retailer, a sum of approximately 8 Rs. will be deducted in MRP. Now value left to 27 Rs.
Trade price for the drug will be 70% of MRP i.e. 24.50/-.This is price that is supposed to be at which Pharma franchisee Distributor will provide drugs to the wholesaler but it is not actual. We consider it standard and use it to find profit margin.
So, Stockiest Margin = Retailer Price – Trade Rate (i.e. 27-24.5 = 2.5 Rs, Nearly 10% of Trade rate)
Now 13.50 Rs left in the hand of Pharma franchisee Distributor. His marketing cost (promotion inputs or commission, small gifts, tours, functions etc.) will be approximately 25 to 30 % of total MRP and this amount will be nearly 8.75 to 10.5 Rs. Total margin of Pharma franchisee Distributor will be 4.75 to 3 Rs and that is equal to 43% to 25 %. In this margin, franchisee salary, travelling expenses, medical representative expenses etc. At purchase of 11/-, you can earn minimum of 3/- as gross profit.
That margin is not enough if we will calculate difficulty and competition in market. That Calculation was based upon upon general calculations, you can’t calculate price to retailer or price to stockist from it. It is general calculation for calculating roughly profit margin. If someone finds it incorrect, he can make amendment in it and advice me to correct it. I will be apologized for any mistake.
But one thing, I want to make clear for Pharma Franchise Companies, they should respect their franchise because they do most of hard work to sell your product and gets minimum margin to fulfill their life.
You can ask for price list of Pharma pcd Franchise company by mail from us. Send your query for product cum price list at email@example.com
We can provide you free of cost Pharma Franchise consultant to PharmaDistributors and Marketing professionals want to start his own marketing. You can mail me for your question and problems at firstname.lastname@example.org or through contact box…