Understanding the APM report can be slightly challenging at first. Therefore, in this article we will cover all the areas that make up the APM in an easy to understand format with the aid of the screenshot below.
In the top left you will see the black box which shows the rule that the APM is implementing for that product. As you can see you can have more than one rule implemented into your system. In the case of rule 1, the rule implemented is if our price is beaten (if the products price is currently beaten then match the competitors price). To view the current rule, click on the rule ID in the filter section towards the top of the APM report. In the yellow box you can see the profit margin of the selected product at its current price, and in the red box you can see the profit margin of the product as a percentage at its current price. The APM will then check the retailer total price against your total price and if this correlates with the business rule it will suggest a new APM price. This takes us over to the blue and purple box which is similar to the yellow and red, however this is the profit margin after the APM recommendation. The APM also takes into account VAT in the profit margins.
If we take an example to illustrate – in this case the first one in the table which is the Mizuno JPX900 Steel Irons. Our total price on the product is 649.00, multiplied by 1.2 to calculate the price inclusive of VAT (may not be this exact VAT rate, this is just for this example), minus the product cost, is equal to Our Margin price. In this example the cost of the product is 356.95, which can be found in the product feed.
So 649.00 ÷ 1.2= 540.83 540.83-356.95= 183.88 in a percentage this will be- 33.99%
As you can see this is how the APM automatically calculates the Margins and this is the same for the price after the APM has implemented your chosen rule. Therefore for the same product the margin will be calculated as-
535.00÷1.2=-445.83 445.83-356.95= 88.88 in a percentage this will be- 19.94%
Therefore, with the APM implementing the business rule you will be making 88.88 (19.94%) from the product and you will be matching the most competitive price available. As you can see, this price management tool is an efficient way to ensure your competitiveness on a daily basis.
