Work out category margin mix instantly with clear inputs, formula shown and shareable results.
Blended margin is total gross profit over total sales, so it moves with mix as well as with individual category margins. Shifting five points of sales mix towards the higher-margin category here changes the blended rate without any price or cost action at all.
Blended margin
Blended % = Total gross profit / Total sales x 100
Mix effect
A five-point mix shift changes gross profit by Total sales x 5% x (Margin B - Margin A)
Usually because growth is concentrated in a lower-margin category. The mix effect is often larger than any rate change.
Recalculate blended margin holding mix constant at the prior period. The difference from the actual is the mix effect.