Questions and answers
Business questions, answered directly.
Short, clear answers to the questions owners ask about billing, stock, margins, restaurants, gyms and fees. Each one links to a full guide and, where it helps, a calculator.
Billing and POS
- Does billing software work without the internet?It depends on where the software runs. Billing software installed on a computer in your shop usually keeps billing with no internet at all, because it…
- What is average bill value, and how do you increase it?Average bill value is the amount a customer spends per bill on average: total sales divided by the number of bills in the same period. A shop that tak…
Inventory and stock
- How much stock should a shop keep?Enough of each item to cover sales until the next delivery arrives, plus a small safety buffer, and no more than one order’s worth on top. For each im…
- What is dead stock, and what should you do with it?Dead stock is stock that has not sold for a long time and is unlikely to sell at its normal price, such as last season’s sizes, discontinued models or…
- What is FIFO in inventory?FIFO stands for first in, first out. On the shelf, it means selling the oldest stock before newer stock. In accounts, it means assuming the units you …
- What is safety stock, and how much should you keep?Safety stock is the extra stock you keep on top of what you expect to sell while waiting for a delivery, so a busy day or a late supplier does not emp…
Retail operations
Business calculations
- How do you calculate GST from a GST-inclusive price?Divide the inclusive price by (1 + rate ÷ 100) to get the taxable value, then subtract it from the price to get the GST. In one step, GST = inclusive …
- How do you calculate markup on cost?Markup is profit as a share of the cost price: (selling price − cost) ÷ cost × 100. An item bought for ₹250 and sold for ₹350 has a ₹100 profit and a …
- How do you calculate profit margin?Profit margin is profit as a share of the selling price: (selling price − cost) ÷ selling price × 100. A bag that costs ₹840 and sells for ₹1,200 make…
- What is contribution margin?Contribution margin is what a sale leaves after paying its own variable costs: selling price minus variable cost per unit. That amount contributes fir…
- What is cost of goods sold (COGS), and how is it calculated?Cost of goods sold (COGS) is what the goods you sold in a period cost you to buy and bring into the shop. Calculate it as opening stock + purchases − …
- What is the difference between gross profit and net profit?Gross profit is what is left from sales after paying for the goods you sold. Net profit is what is left after also paying every running expense, such …
Restaurants and food business
- What is a KOT (kitchen order ticket) in a restaurant?A KOT (kitchen order ticket) is the instruction that tells the kitchen what to prepare for an order: the table or order number, the items, quantities …
- What is food cost percentage?Food cost percentage is the share of a dish's price, or of a restaurant's food sales, that is spent on ingredients. Divide the ingredient cost by the …
- What is table turnover rate in a restaurant?Table turnover rate is the number of times, on average, each table is used by a new party during a service or a day. Divide the number of parties seat…