A report showing profit earned on each individual product across all sales
An item-wise profit report is a detailed financial report that shows the profit earned on each individual product or item across all sales transactions during a selected period. For every item, it displays the total quantity sold, total sales value, total cost of goods sold (based on purchase price, FIFO, or weighted average cost), and the resulting gross profit and margin percentage. This report is one of the most valuable tools for Indian small business owners because it reveals which products are the real profit drivers and which ones are underperforming or even selling at a loss. Unlike a bill-wise profit report that shows profitability per invoice, the item-wise profit report aggregates data across all invoices to give you a product-level view of your business. It helps you make informed decisions about pricing adjustments, supplier negotiations, product mix optimisation, and inventory purchasing priorities. For businesses with hundreds of SKUs, this report quickly identifies the top 20% of products generating 80% of your profits — following the Pareto principle — and highlights items that may need price revisions or discontinuation.
You run a cosmetics store in Lucknow with 150 products. Your item-wise profit report for January shows: Lakme Foundation — Sold 45 units, Sales Rs. 67,500, Cost Rs. 47,250, Profit Rs. 20,250 (30% margin). Nivea Body Lotion — Sold 80 units, Sales Rs. 28,000, Cost Rs. 22,400, Profit Rs. 5,600 (20% margin). Local Brand Face Wash — Sold 120 units, Sales Rs. 18,000, Cost Rs. 16,200, Profit Rs. 1,800 (10% margin). This tells you that Lakme Foundation is your highest-profit product in absolute terms, while the local face wash has the lowest margin and may need a price increase or supplier renegotiation.
Item-wise profit shows profitability per product across all invoices — answering 'which products earn the most?' Bill-wise profit shows profitability per invoice — answering 'which transactions were most profitable?' Both are important: item-wise helps with pricing and product decisions, while bill-wise helps evaluate customer-level and deal-level profitability.
The cost price depends on your valuation method. With FIFO, the cost of the earliest purchased stock is used first. With weighted average, the average of all purchase prices (weighted by quantity) is used. With last purchase price, the most recent buying price is applied. Choosing the right method affects your reported profit figures.
Yes, the item-wise profit report is excellent for identifying products with consistently low or negative margins. If a product shows less than 5% margin over several months despite good sales volume, it may be worth negotiating a better purchase price, increasing the selling price, or discontinuing it in favour of a more profitable alternative.
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