Nextian captures financial information (revenue, cost, profit and margin) on an individual service level. Aggregate numbers are also available for customers (accounts), products and locations; however, they are always derived from service numbers.
The structure of the financial information for a service resembles a monthly income statement:
| Monthly Recurring Revenue (MRR) | ← | monthly service revenue (what customer sees on the bill before taxes) similar to gross revenue |
| Cost of Elements | ← | similar to COGS (Cost of Goods Sold) calculated as a sum of monthly cost of all elements making up the service |
| Gross Profit | ← | monthly recurring revenue – cost of elements |
| Gross Margin % | ← | gross profit / monthly recurring revenue as % (gross profit expressed as percentage) |
| Commission | ← | amount of sales commission, treated as SGNA/operational expense |
| Net Profit | ← | gross margin – commission |
| Net Margin % | ← | net margin / monthly recurring revenue as % (gross profit expressed as percentage) |
| Important | In Nextian nomenclature margin is always a percent value and profit is a dollar (or currency) amount. |
For example:
| $350.00 | monthly service revenue |
| $225.00 | cost of elements of the service (e.g., a firewall, port on a switch, bandwidth, etc.) |
| $125.00 | gross profit |
| 35.7% | gross margin |
| 52.50 | commission (15% of revenue) |
| 72.50 | net profit |
| 20.7% | net margin |
While this is by no means a fully functional financial model, it is sufficient for account managers to quickly answer important questions like:
- Which customer should I call first during multiple outages: one with a service that yields most revenue?
- Or service for a customer that has the largest total revenue?
- Or maybe service that has the highest profit?
- Which upgrade opportunity should I address first: one that can give the largest additional revenue?
- Or one that can give the largest additional profit?
