Distributor ROI Calculator
Prove the distributor makes money on your brand
How to calculate distributor ROI in FMCG
Distributor ROI tells you how much a distributor earns in a year for every rupee they have put into your brand. It is the number a good distributor checks before taking a brand, and the one brands use to show a new distributor that the business is worth it.
The formula
Distributor ROI (%) = Net profit in a year ÷ Total investment × 100
- Net profit = margin from the brand + scheme income − running costs (salesmen, vehicle, godown rent, other costs).
- Total investment = money locked in stock + money given as credit to retailers + fixed assets (vehicle, racks, computer).
- Stock and credit are worked out in days: turnover × days ÷ 30.
Worked example
Sample figures to show the method. Use your own numbers.
| Monthly turnover | ₹20,00,000 |
| Margin 6% + scheme 1% | ₹1,40,000 a month |
| Running costs (salesmen ₹36,000, vehicle ₹25,000, godown ₹15,000, other ₹9,000) | ₹85,000 a month |
| Net profit | ₹55,000 a month = ₹6,60,000 a year |
| Stock (15 days) | ₹10,00,000 |
| Market credit (10 days) | ₹6,66,667 |
| Fixed assets | ₹5,00,000 |
| Total investment | ₹21,66,667 |
| Distributor ROI | 30.5% a year (about 2.5% a month) |
How to read the result
- Compare the ROI with what the same money would earn elsewhere, for example a fixed deposit or the interest on a working-capital loan. If the ROI is not clearly higher, the distributor has little reason to stay.
- Cutting the days of stock and credit frees up money and can raise ROI as much as a higher margin does.
- Schemes count only if they are actually paid. Leave out any scheme income that is often delayed or disputed.