FAQ: Average Sales Margin/As Sold Margin (ASM)

The Core ASM Formula

Regardless of the discount model being used, the fundamental calculation for the Average Sales Margin is:

ASM = 1 - (Total Cost / (Total Fees - Total Discount))

Components of the Calculation

To understand the final margin, you must consider the three primary variables used in the formula:

• Total Fees: This is the sum of all resource fees. For Time & Materials (T&M) projects, this includes total resource fees plus any billable other fees and expenses. For Fixed Fee projects, it may also include a "Fixed Fee Buffer Amount".
• Total Cost: This calculation varies depending on your project type:
  • Fixed Fee: Calculated as Services Uplifted Costs + (Other Costs if enabled) + (T&E if enabled).
  • Time & Materials (T&M): Calculated as Service Costs + (Other Costs if enabled) + (T&E if enabled).
• Total Discount: This is the combined sum of any discounts applied at the Timeline Level (overall project) or the Header/Resource Level (individual line items).

Factors that Impact the Margin

As a user, you have several configuration options that directly change how the ASM is calculated:

• Impact Flags: When creating a timeline, you can manually indicate if you want Other Costs and Travel & Expense (T&E) to impact the ASM,. If these flags are turned on, those specific expenses are factored into the "Total Cost" portion of the margin formula.
• Real-Time Updates: The ASM updates immediately in the timeline overview whenever you enter or change a value in the 'Disc %' (Discount Percentage) field.
• Third-Party Margins: If you add a third-party service or vendor and want to add a margin fee specifically for that cost, you can manually enter a higher value in the 'Total Fees' cell than what is in the 'Total Costs' cell. The system will retain this difference as a margin, which rolls up into the overall quote totals.
• Transparency: If the 'Cost Impact ASM' flag is enabled, you can roll your cursor over the 'Net Fees' summary in the timeline overview to see a detailed breakdown of every fee contributing to the calculation.