Profitability analysis

Output of an organisation can be grouped into products, customers, locations, channels and/or transactions.

When the costs have been allocated, they can be deducted from the revenues per output unit.

The remainder shows the unit margin of a product, client, location, channel or transaction.

Managers can decide to stop selling loss making products, to reduce costs for loss making customers or to increase sales in profitable locations.

By doing so it is possible to create a so-called 'Whale Curve', graphically showing the potential margin of an organisation.