Ask the Collective

Should margin percentages be calculated on ex-duty or including duty values?

Calculate margins **ex-duty and ex-VAT** for accurate performance tracking and meaningful peer comparison. Duty is a consumer tax controlled by government policy, not part of your operational margin; if duty rates change, customers expect price increases to reflect that exactly, so including duty in margin calculations masks true business performance and confuses stakeholders. This approach is especially critical if you have mixed duty-paid and duty-suspended sales, or if export represents a significant part of your business (export sales distort comparisons when duty is included). The trade-off is operational complexity—your systems need to track duty separately—but members with mixed sales models confirm it's manageable once set up. One member noted this is easier said than done depending on system complexity, so audit your data infrastructure before implementing.