Progressive vs. Simple OP* Matrices

Most dealers are familiar with the Simple Price Matrix which is a basic markup table, based on an item’s cost. Those markup figures change as the cost changes. However, Progressive Price Matrix allows you to make more as it calculates the selling price based on each pricing tier, right up to the limit for that item’s cost. See example below.

Using the above Price Matrix table, an item that costs $50 would calculate at $90.90 using our Simple Matrix. Using the same table but as a Progressive Matrix, the $50 item would instead sell for $100.17.

Let’s review the breakdown below.

Using our Price Matrix table above and an item costing $50, your breakdown would be as follows:

• 1st $5 Tier: The first $5 of our $50 cost we multiply by a GP of 60% = $12.50
• 2nd $15 Tier: The next $10 of our $50 cost gets us to our next tier of $15. We multiply that $10 with a GP markup of 55% = $22.22
• 3rd $25 Tier: The next $10 of our $50 cost gets us to the $25 tier. We multiply that $10 with a GP markup of 50% = $20.00
• 4th $50 Tier: The last $25 of our $50 cost gets us to the next tier of $50 which is as high as we need to go since there is no cost remaining from our $50 now. We multiple that remaining $25 with our last GP markup of 45% = $45.45

 

$12.50 + $22.22 + $20.00 + $45.45 = $100.17
$100.17 provides $9.27 more in profit than using a Simple Matrix.

You can see the difference between Progressive and Simple Matrices by using the Test Auto Price feature in the Inventory Add/Edit/Delete Cost/Price Tab. Set your Auto Price to Simple Matrix and then type in your test cost. Click on the Calculate Price button and see your selling price. Then change the Auto Price to Progressive Matrix and repeat the test to see how much more you could be making with

Progressive Matrix:

Simple Matrix: