How to determine the cash equivalent of your IMS dollars
When making a purchase with your IMS dollars, you often pay prices slightly higher than a competitor’s cash discount price. It is important to be able to determine the real cash equivalent of your IMS dollars to be able to “weigh” the buying decision.
The chart below allows you to quickly figure the actual cash cost of merchandise and services purchased through the IMS payment system using your gross profit margin (GPM) as the discount you receive on those purchases. Here’s how to use the chart:
- Determine your gross profit margin (GPM), subtract the cost of the IMS service fees on purchases. If your GPM is 50% and the service fees are 13% cash, you will realize a barter profit margin (BPM) of 37% on a typical sale through IMS.
- Find the dollar amount of your purchase in the left-hand column, i.e., $400. Read across the top column to find your GPM or BPM. In the 35% column, a $400 IMS purchase actually costs you around $260 in cash.
To be a smart trader, in advance of purchasing use this method to determine when a purchase through IMS is a profitable transaction. Nine times out of ten, the discount earned by you on IMS sales will offer you a better savings than the discounted cash price.