The sales mix refers to the proportion of products that a business sells, it is a calculation that seeks to identify the variety of products and the proportion a company sells at a particular time. When this calculation is done, it reflects the proportion of a product sold in relation to the total sales of the business. For instance, if a business sells 100 units of products what is sales mix for a day, 80 units of products might be product A while Product B and C share the remaining 20 units. Sales mix refers to the proportion or ratio of different products or services that a business sells, typically expressed as a percentage of total sales. It provides insights into which products or services are the most popular or generate the most revenue for the company.

That’s $14,200 more net cash for the same amount of covers, the same amount of labor…focusing on the “lousy” food cost is a mistake. S.P.I.N. was created in 1988 by sales expert Neil Rackham as a way to get salespeople looking at their prospects more granularly. It focuses on actively listening to prospects and thoughtfully brainstorming solutions to their business problems.

  1. Sales mix offers clear visibility to the management as to which product gets more profit percentage and which is underperforming.
  2. With the help of the sales mix, an organization determines if the product should receive the priority and focus.
  3. The pure blank looks from senior management when I try to explain why running a high food cost isn’t the metric they should be looking at boggles my mind.
  4. These salespeople don’t tend to work in a traditional office, because they travel to meet with clients.

It’s worth noting that sales mix can also refer to the variety of products sold by a company (or the “mix” of “sales,” if you will), but for business purposes, we’re going to use the definition above. Sales mix digs deep into the individual percentages and profits of your products so you can determine what stays, what goes, and what gets an update. Not every product is a best-seller, but that doesn’t mean it can’t hold value for the company. Inside sales involves selling to customers remotely, often through live chat, video conferencing, email, or by phone. These reps usually work at an office or from their homes (hence “inside”) and rarely need to travel for business.

For example, in this 2021 Home Depot annual report, the company breaks down its total revenue by merchandising department to show its sales mix. This means for every $100 worth of wired speakers your company sells, it results in $75 of profit. Although this is a part of doing business, it is important to understand how each product line is performing, and you’ll use a sales mix formula to determine that.

To improve your company’s sales mix, you need to understand sales mix variance. When you dig into what your company’s sales mix is, you uncover hard data that tells you exactly how much money the sale of each product is contributing to the bottom line. This can not only help you determine how to set future budgets, but it can also provide information about the function, placement, and selling strategies behind each product your company offers. While direct salespeople build relationships face to face and create relationships with companies and individuals, it can be time-consuming to find and service customers. Direct sales also requires a thick skin, since frequent rejection is often part of the game.

Lead Velocity: What It Is & How to Calculate It

You might identify and contact potential partners proactively by going to trade shows to highlight your solutions. Or, you could let them come to you directly by setting up a form on your website so prospective partners can show interest in selling your products. To be an effective B2B salesperson, you need to have extensive knowledge of your product or service, as well as your customer’s business needs and challenges. You need to know how your solution can benefit your prospect’s company by alleviating pain points and meeting business goals. Above all, you need to be able to communicate that to them in a way that instills authority and trust. According to the State of Sales, 82% of business buyers expect sales representatives to act as trusted advisors.

Sales Mix – Definition, Formula, Meaning and Examples

Companies review sales mix variances to identify which products and product lines are performing well and which ones are not. It tells the “what” but not the “why.” As a result, companies use the sales mix variance and other analytical data before making changes. For example, companies use profit margins (net income/sales) to compare the profitability of different products. Assume, for example, that a hardware store sells a $100 trimmer and a $200 lawnmower and earns $20 per unit and $30 per unit, respectively. The profit margin on the trimmer is 20% ($20/$100), while the lawnmower’s profit margin is 15% ($30/$200).

Sales Mix, Menu Mix and Menu Engineering

This model is also called partner selling or indirect selling, because the company does not have a direct connection to the customer. For example, you might sell through independent brokers or agents who arrange transactions in exchange for a commission. The B2B sales cycle is typically longer than traditional B2C (business-to-consumer) selling since it can involve much higher costs, more complexity, and more stakeholders. Enterprise sales, which involves selling to large organizations, may have longer lead times since selling to an enterprise can be highly complex. A small or midsize business (SMB), on the other hand, may only have a handful of people who need to sign off on a deal, so it can often close sooner.

The HubSpot Customer Platform

Most commonly, sales mix refers to the proportion of sales a single product accounts for in a company’s total sales. It is used to determine which products are performing well and which products are sinking so that inventory adjustments can be made down the line. Business-to-consumer (B2C) sales is when a business sells directly to its customers. When you make a personal purchase at a store or online, that’s a business-to-consumer (B2C) sale. Because these deals are usually simpler and less costly than B2B sales, the sales cycle is shorter.

Sales Mix Variance measures the change in profit or contribution attributable to the variation in the proportion of the different products from the standard mix. For instance, a bicycle retailer might carry five $500 bicycles, two $1,000 bicycles, and one $5,000 bicycle. The company has a smaller investment in the $500 bicycles and will most likely receive a smaller profit on the sale of these bikes. The $5,000 bicycle requires a higher investment and will also return a higher profit percentage than the lower cost bicycles. The breakeven point will be based on the current sales and costs of the bikes.

Unlocking a measurable sales pipeline

The sales mix report is important, because it’s used by different departments in the business to make decisions. To calculate the sales mix ratio of each product or category, you divide the sales of this product or category by the total revenue of the business and multiply by 100 to get the percentage. Through these calculations, we can see the sales of wired speakers had a positive variance, meaning the company made an additional $606 dollars in sales of this product. For the Bluetooth speakers, there was an unfavorable variance, meaning the actual cost to produce and sell the Bluetooth speakers was $138.60 greater than the expected cost.

Regardless of the state of the economy, understanding the different types of sales and how you can be most effective in closing deals is an excellent way to find success. As an illustration, pharmaceutical reps focus on a specific high-value practice. They may, for example, sell blood pressure drugs to a few highly-reviewed cardiologist practices in a specific metro area.