Some base assumptions have been set up on the calculator. These are for guidance only and should be adapted for your own situation.

The outcome will show a profit (or loss) on an enterprise on a $/ha basis. The higher the gross margin, the more profit you have.

1. Enter your base yield. A good starting point is your long term average for the area in question. This calculator is based on a cropping enterprise.
2. Enter a grain price – Use the long term net on farm values, say a five year average. Do not use current prices as these are likely to be misleading.
3. Enter the individual inputs for the crop. This should include all costs you include in your gross margin calculations (i.e. all direct costs)
4. This will leave you with a gross margin for the crop in question.
5. Enter your cost of funds. (if you are borrowing money then this should be at the cost of your overdraft. If you have credit funds in the bank this should be at the rate of interest you are being paid, or the rate of return you will get from investing the funds elsewhere)
6. Enter in your machinery costs and your depreciation costs for the machinery you use in the enterprise.

This calculator, like all on the Soil Quality website has been simplified to provide guidance calculating a gross margin. Please note this calculator will only be as good as your assumptions.

A gross margin is the difference from the income minus your input costs. It is a measure of an enterprises contribution to a business. Gross margins are a base tool with many uses, ideal for testing assumptions, from profitability of different crops through to assisting in determining the value you are prepared to pay for a lease or purchase. They are also ideal for testing planned changes in management regimes, including those on soil health.