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Methodology

Channel Profitability Diagnostic methodology

Measure channel profit after COGS, percentage fees, variable costs and channel fixed costs.
Duc Nguyen X.By Duc Nguyen X.· Founder, Margin101Last reviewed: View update historyMethodology

Educational only: Business decision support, not accounting, tax or legal advice.

Privacy: Calculations run locally; Margin101 does not receive your commercial inputs.

Update policy: Reviewed when formulas or official dependencies change.

Scope: Market-neutral small-business planning using your own assumptions.

1. Formulas and units

Channel Fees Ex Tax
channelFeesExTax = channel revenue × fee rate

Where

channelRevenueExTax
Channel revenue (currency units/planning period, ex tax)Source: Business record
channelFeeRate
Channel fee rate (proportion of channel revenue charged as channel fees)Source: Business record
channelFeesExTax
Channel Fees Ex Tax (currency units, ex tax)Source: Calculated output
Channel Contribution Ex Tax
channelContributionExTax = revenue − COGS − fees − variable costs

Where

channelRevenueExTax
Channel revenue (currency units/planning period, ex tax)Source: Business record
channelCogsExTax
Channel COGS (currency units/channel planning period, ex tax)Source: Business record
channelVariableCostsExTax
Other variable costs (currency units/planning period, ex tax)Source: Business record
channelFeesExTax
Channel Fees Ex Tax (currency units, ex tax)Source: Calculated output
channelContributionExTax
Channel Contribution Ex Tax (currency units, ex tax)Source: Calculated output
Channel Profit Ex Tax
channelProfitExTax = channel contribution − channel fixed costs

Where

channelFixedCostsExTax
Channel fixed costs (currency units/planning period, ex tax)Source: Business record
channelContributionExTax
Channel Contribution Ex Tax (currency units, ex tax)Source: Calculated output
channelProfitExTax
Channel Profit Ex Tax (currency units, ex tax)Source: Calculated output
Channel Profit Margin
channelProfitMargin = channel profit / channel revenue

Where

channelRevenueExTax
Channel revenue (currency units/planning period, ex tax)Source: Business record
channelProfitExTax
Channel Profit Ex Tax (currency units, ex tax)Source: Calculated output
channelProfitMargin
Channel Profit Margin (decimal rate)Source: Calculated output

Money inputs and outputs use the currency selected in the scenario without changing the canonical methodology. Rates, margins, utilisation and buffers are entered as percentages and converted to decimal values for calculation.

2. Worked example

Input assumptions

The worked rows below come directly from the registered engine and visible default fixture.

Calculation and outputs

Example

The worked rows below come directly from the registered engine and visible default fixture.

Channel Fees Ex Tax
36,000 currency units
Channel Contribution Ex Tax
99,000 currency units
Channel Profit Ex Tax
59,000 currency units
Channel Profit Margin
19.7%

The exact engine-derived outputs are shown in the labelled rows below.

Interpretation

Channel profit shows what remains after channel COGS, percentage fees, other variable costs and channel-specific fixed costs.

3. Validation and boundary checks

  • All inputs must be finite and within the visible boundaries.
  • Costs, revenue and contribution use one consistent ex-tax basis and planning period.
  • Whole-unit thresholds round upward only where the named engine formula requires it.

4. Assumptions and source classification

  • All prices, costs, demand limits and capacity values are user-supplied records or explicit scenarios.
  • Allocated costs remain visible and separate from avoidable costs.
  • The global workflow infers no market benchmark, policy threshold or future demand.

This diagnostic has no current policy-data dependency. Its commercial assumptions are user supplied. Registered family-level regression suites exercise the shared business-logic engine and worked-result reconciliation.

5. Limitations

  • The model does not forecast demand, implementation timing, service quality or strategic fit.
  • It does not replace accounting, tax, legal or financial advice.

This is educational decision support, not tax, accounting, legal or financial advice. Check the treatment of your actual transactions under the rules that apply to your business and seek qualified advice where appropriate.

6. Update and evidence policy

Registered family-level suites test formula invariants and example reconciliation; the release ledger records that coverage without claiming a separate oracle for every line of public copy. There is no official threshold or benchmark to refresh for this diagnostic. Commercial inputs remain user-supplied because they vary by business and contract.

Change history

  1. : Initial public release of the Channel Profitability Diagnostic planner and methodology.

Related reading

Guides to interpret the decision and its assumptions.

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