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Chemicals Profitability: Measuring the Profitability of Customers/Contracts

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Published on Jun 12, 2012

In B2B, especially in the chemical industry, deals (quotes, contracts, agreements) can be quite complex as the profitability of the deal (or lack thereof) is driven by many things, not just the price per unit of the material(s) being sold. Margin leakage and margin recovery are driven by things like costs-to-serve (e.g. freight/transportation, cost of payment terms, certificates of analysis), rebates, and even related capital investments. To complicate things further, costs and costs-to-serve can vary depending on each combination of the plant (ship-from), the material, the customer location (ship-to), etc. All of these factors (and often others) can make understanding the profitability of a deal very difficult.

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