# Price Matrix Multiplier and Gross Margin Calculator for Distributors > Source: https://netray.co/tools/p21-price-matrix-multiplier-margin-calculator > Publisher: Netray (netray.co), AI and integration engineering for ERP and manufacturing systems. > Section: Free Tools ## Short answer See the true margin of a cost-plus multiplier after customer discount, vendor rebate and inbound freight, and solve for the multiplier a target margin needs. ## Category epicor ## Erp Epicor Prophet 21 ## Industry Wholesale Distribution ## Audience - Pricing analyst - Sales operations - Distribution controller ## Tool **Kind:** calculator **Currency:** $ **Inputs:** #### Replacement cost **Key:** cost **Type:** number **Default:** 42.5 **Min:** 0 **Step:** 0.5 **Unit:** $ **Help:** Current vendor cost per unit before rebate and freight. #### Matrix multiplier **Key:** mult **Type:** number **Default:** 1.35 **Min:** 0.5 **Max:** 5 **Step:** 0.01 **Help:** Sell price divided by cost. A multiplier of 1.35 is a 35 percent markup. #### Customer discount off matrix price **Key:** disc **Type:** number **Default:** 5 **Min:** 0 **Max:** 60 **Step:** 0.5 **Unit:** % **Help:** Contract or negotiated discount applied after the matrix. #### Vendor rebate **Key:** rebate **Type:** number **Default:** 2 **Min:** 0 **Max:** 30 **Step:** 0.1 **Unit:** % **Help:** Expected net rebate as a percent of purchases. #### Inbound freight and handling **Key:** freight **Type:** number **Default:** 3 **Min:** 0 **Max:** 30 **Step:** 0.1 **Unit:** % of cost #### Target gross margin **Key:** target **Type:** number **Default:** 28 **Min:** 1 **Max:** 80 **Step:** 0.5 **Unit:** % **Outputs:** #### Net selling price **Key:** sell **Expr:** cost * mult * (1 - disc / 100) **Format:** currency #### Landed net cost **Key:** net_cost **Expr:** cost * (1 + freight / 100) * (1 - rebate / 100) **Format:** currency #### Gross margin per unit **Key:** gm_dollars **Expr:** sell - net_cost **Format:** currency #### Gross margin percent **Key:** gm_pct **Expr:** if(gt(sell, 0), gm_dollars / sell * 100, 0) **Format:** percent **Primary:** true #### Markup on landed cost **Key:** markup_pct **Expr:** if(gt(net_cost, 0), gm_dollars / net_cost * 100, 0) **Format:** percent #### Multiplier needed for target margin **Key:** req_mult **Expr:** if(gt(cost, 0), net_cost / (1 - target / 100) / (1 - disc / 100) / cost, 0) **Format:** decimal **Primary:** true **Description:** Holds discount, rebate and freight constant. **Chart:** #### Gross margin percent by multiplier **Type:** line **X:** mult **From:** 1 **To:** 2 **Steps:** 30 **Series:** - gm_pct **Disclaimer:** Single-item model. Real margin varies with mix, rebate tiers and actual freight. ## Content **Intro:** A multiplier on cost looks simple until discounts, rebates and freight arrive. This calculator shows the margin that actually lands and solves for the multiplier you need to hit a target. **Sections:** #### How to use it **Body:** Enter the replacement cost and the multiplier your pricing setup applies, whether that lives in a price library in Prophet 21, a matrix in Eclipse, or a spreadsheet. Add the customer discount, the vendor rebate you expect and inbound freight as a percent of cost. The tool returns net price, landed cost, margin in dollars and percent, and the multiplier required to reach your target margin. **Bullets:** - Use replacement cost for forward pricing, average cost for historical analysis. - Rebate should be the net, earned amount, not the headline tier. - Check margin at the lowest discount tier a customer can reach. #### Markup versus margin **Body:** Markup is profit over cost, margin is profit over price. A multiplier of 1.35 gives a 35 percent markup but only about a 26 percent margin before any discount. The required multiplier is net landed cost divided by (1 minus target margin) divided by (1 minus discount), then divided by raw cost. Confusing the two is the most common reason distributors under-price. #### Reading the chart **Body:** The curve shows margin rising with the multiplier but flattening. Near a multiplier of 1.0 you earn nothing after freight and discount, so small changes there matter far more than the same change at 1.8. Use it to see how much margin a 0.05 change in a price page buys. #### Common mistakes **Body:** Do not apply a rebate you have not earned, and do not ignore that discounts compound with matrix overrides. Also remember that a price library change affects every customer on that rule, so test the new multiplier against your top accounts before you release it. **Cta:** Netray can help analyze existing pricing rules and invoiced margin from your ERP data to find where the effective margin differs from the intended one. **Faq:** #### What is the difference between markup and margin? **Answer:** Markup divides profit by cost; margin divides profit by selling price. A 25 percent margin equals a 33.3 percent markup. Distributors who quote margins but set markups routinely under-price by several points. #### Why is my margin lower than the multiplier suggests? **Answer:** Discounts, freight, rebate timing and cost changes all move it. A 1.35 multiplier with a 5 percent discount and 3 percent freight falls well below the 26 percent margin the multiplier implies on paper. #### Does this work for Eclipse matrix pricing? **Answer:** The math applies to any cost-plus multiplier approach, including Eclipse matrices and P21 price pages or libraries. It does not read your system, so enter the values you see there. #### Can I use selling price instead of cost? **Answer:** Yes, if you work backwards. Set the multiplier to 1 and enter your selling price as cost to see margin against net landed cost, then adjust inputs. ## Search terms price matrix multiplier calculator, markup vs margin calculator distributor, cost plus multiplier pricing, prophet 21 pricing margin, eclipse matrix pricing multiplier, target gross margin multiplier, distributor pricing calculator --- Talk to an engineer: https://netray.co/contact?intent=erp_ai | Machine catalog: https://netray.co/agent/catalog.json