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Manage healthy gross profit margins


Pharmacies use a number of different pricing strategies to drive sales. Keeping your gross profit margins in check can help you meet your profitability goals.


In this article, we will explore a few techniques you can use to improve your gross profit margin.


Assess your current margins

The ideal place to start is to conduct an analysis of your current gross profit margins across your business. In Minfos, we have a number of reports and tools that can be used to help your pharmacy with this evaluation. Consider analysing:

  • Products that have a negative gross profit percentage (GP%)
  • GP% of high-cost items
  • All products by GP%
  • Top best and worst selling products by GP%
  • Top best and worst selling products within each category by GP%


The objective of this analysis is to identify your strongest and poorest performing products/categories and their respective gross profit margins.


Use your findings and investigate why these products are not selling, then create a strategy to address these issues. Some strategies to manage low GP% products could include keeping the item stocked as a strategic loss leader, eliminate products from your offering or increase product visibility.


Avoid markdowns

There are a myriad of reasons why you may have decided to markdown a product. Perhaps it’s a slow mover, nearing expiry, a clearance item or old stock. Whatever, the reason, markdowns affect margins. 


For products you currently need to markdown, consider including these products as part of a bundle offer where your margin is not compromised.


Smart discounting

Focus on pricing your discounted products in a way that encourages your customers to increase their basket size or transactional value.


Order right

Take a look at your past sales performance to understand customer demand for a particular period or season and order based on what sells well. Use your POS software to maintain appropriate stock levels. In Minfos, we provide tools and reports to help you maintain the right level of stock for your pharmacy.


Reduce operating costs

  • Plan ahead for the year – e.g. create a strategy for high-performing seasonal stock
  • Leverage supplier relationships – e.g. request better trading terms
  • Eliminate waste – automate processes to focus on more valuable activities


We hope you have found the above information on how you can improve your profit position useful.


Looking to easily manage healthy gross profit margins? Minfos software enables you to manage every aspect of your pharmacy – from dispense to retail. Let us show you a demo.


All advice provided is general in nature and is not intended as legal advice.