Explanations/clarifications

• Simple farm enterprise: Farm enterprise with a single product, for example tomato cultivation, beef cattle.
• Machinery rentals: Any mechanized work paid to a third party, e.g. hiring a combine harvester.
• Feeding stuffs: On-farm production for own consumption is not included.
• Cost of production: If it is equal to selling price then there is no profit or loss (break even price).
• Mark-up (%): It is the gross profit as a percentage of the cost.
• Gross margin (%): It is different from mark-up. It is the gross profit as a percentage of the selling price.

Equations

• Cost of production = Total expenses / Production
• Gross Profit (Euro) = Selling price - Cost of production
• Mark-up (%) = [Gross Profit / Cost of production] * 100
• Gross margin = [Gross Profit / Selling price] * 100
• Selling price = Cost of production / [1 - (gross profit / 100)]

Assumptions

• Total expenses > 0
• Gross margin < 100

To be used when the selling price is determined by a third party (e.g. wholesalers). Producers are price-takers.

Instructions

1. Insert all expenses. You may leave blank any cell that is not applicable in your case. Any expenses that are not included in the list may be inserted in "Other expenses".
2. Insert the total production.
3. Insert the selling price.
4. Click the "Outcome" button.
5. Click the "Reset" button if you wish to clear the calculator.
6. Click the "Save" button if you wish to save the outcome to an Excel spreadsheet.

To be used when the producer is in a position to specify gross margin and thus the selling price, taking into consideration the cost of production, competition and market conditions.

Instructions

1. Insert all expenses. You may leave blank any cell that is not applicable in your case. Any expenses that are not included in the list may be inserted in "Other expenses".
2. Insert the total production.
3. Insert the desired or permissible gross margin taking into consideration the cost of production, market conditions, competition, and demand and supply.
4. Click the "Outcome" button.
5. Click the "Reset" button if you wish to clear the calculator.
6. Click the "Save" button if you wish to save the outcome to an Excel spreadsheet.