Gross margin calculation

Gross Margin is calculated as a percentage of the Shipper Charge not as a percentage of the Pay to Truck rate. If you enter the Gross Margin percentage and have the Pay to Truck Rate the calculation is:

Bill to Shipper = Pay to Truck / (1-Gross Margin%)

Adding the Gross Margin percentage to the Pay to Truck rate will not give you the Shipper Charge (it will be a little low). Subtracting the Gross Margin percentage from the Shipper Charge will give you the exact Pay to Truck rate. Our research showed this was how Gross Margins are most commonly used in the industry.

Here is how the Gross Margin is calculated

 Gross Margin Calculation  

• Gross Margin % Fixed - Formula to calculate the Gross Margin Total is:
  Gross Margin Total = Gross Margin % * Pay to Truck / (1 – Gross Margin %)
  Example: The 2 known variables are Gross Margin % and Pay to Truck. This example is going to use 20% (0.2) and 100.
  
  Gross Margin % = 20% (0.2)
  Pay to Truck = 100
  1 = Whole Shipper Rate (100%)
  Gross Margin Total = X
  
  Formula after plugging in the values: X = (0.2) * 100 / (1 – (0.2))
  X = 20 / (0.8)
  X = 25
  
  Gross Margin Total using a Gross Margin % of 20%(0.2) and Pay to Truck of 100 equals 25 
• Gross Margin Total Fixed - Formula to calculate the Gross Margin % is: 
  Gross Margin % = Gross Margin Total / (Pay to Truck + Gross Margin Total)
  Example: The 2 known variables are Gross Margin Total and Pay to Truck. This example is going to use 25 and 100.
  
  Gross Margin Total = 25
  Pay to Truck = 100
  Gross Margin % = X
  
  Formula after plugging in the values: X = 25 / (100 + 25)
  X = 25 / 125
  X = 20% (0.2)
  Gross Margin % Using a Gross Margin Total of 125 and Pay to Truck of 100 equals 20% (0.2).