How to calculate your gas agency's real profit
By the DeskGas team · Updated
Many distributors judge a month by the cash left at the end of it. That mixes up profit with deposits, credit, stock and money you owe. Here is a simple, honest way to work out what the agency actually earned.
In short
- Margin per cylinder is your selling price minus what you paid the oil company for that cylinder.
- Cost each cylinder at the invoice it came from, oldest stock first.
- Security deposits are money you owe consumers, never income.
Start with revenue
- Refill sales: cylinders sold × the price in force that day, product by product
- NFR sales: stoves, hoses, regulators, lighters
- Service income: installation, inspection, blue book and similar charges
- Not revenue: security deposits on new connections; they are a liability you return when a connection is surrendered
Then the cost of what you sold
The oil company's invoice tells you what each cylinder cost. When prices change, the cylinders already in your godown were bought at the old price. Costing "oldest stock first" (FIFO) keeps the profit honest: the first cylinders sold after a revision carry the old cost.
Do the same for NFR items, from your supplier bills.
Then operating costs
- Delivery-man commission, per cylinder or fixed
- Salaries, fuel, vehicle repair, rent, electricity, office, bank charges
- Shortage and defective claims you have written off
- Free cylinders: no revenue, but their cost is real
A worked example
Example only, with made-up round numbers. In one day XYZ Gas Agency sells 300 domestic refills. Say each sells for ₹60 more than it cost on the truck invoice: gross margin ₹18,000. NFR sales add ₹1,200 of margin. Delivery commission at ₹18 a cylinder is ₹5,400, and other expenses are ₹4,000.
Net profit = 18,000 + 1,200 − 5,400 − 4,000 = ₹9,800. The cash drawer may show far more or far less, because of UPI, credit, deposits and new-connection security. That is why the two must be worked out separately.
How DeskGas helps
DeskGas does this every day from the daily close: FIFO cost from truck invoices, commission from your rates, expenses by category, and a profit figure on the owner's dashboard, separate from the cash count.