Selling products as an auto-entrepreneur: stock, cost price and margin, without a spreadsheet

Potter, seamstress, parts reseller, jewellery maker, argan oil producer, fine grocer: you sell products, and you fall under the 500,000 MAD ceiling of trade, industry and craft activities, with a 0.5% tax on revenue received. The tax side is simple, simpler than for services. Management, though, has three traps, and each closes on a figure you are not tracking. This article takes them one by one, with the method to get out, then the rules specific to a product invoice. Your activity’s exact category is checked in the official list.

Trap 1: not knowing your cost price

A product’s cost price is not the price of the material. It is the material, plus packaging, plus the workshop’s share of rent and energy, plus your time at an hourly rate you would accept from someone else. A leather bag “at 180 MAD of material” that takes four hours of work cannot sell for 350 MAD: at 60 MAD an hour, it already costs 420 MAD before packaging. Compute it once per product, seriously, and revise it whenever a supply goes up.

If you buy your products to resell them, the cost price moves with every purchase: the same item bought at 100 MAD in March and 112 MAD in June does not have a fixed cost. The robust method is the weighted average cost: each stock receipt recomputes the average cost of what you have left. Ten units at 100 MAD in stock, ten units received at 112 MAD: the average cost becomes 106 MAD, and that is the figure used to compute the margin on the next sales. That is what stock software does at every receipt, without you thinking about it.

Trap 2: margin instead of mark-up

Selling a product bought at 100 MAD for 150 MAD is not “50% margin”. It is 50 MAD of margin, i.e. 33% of the selling price. The nuance becomes important when you grant a 20% discount to a reseller: the price drops to 120 MAD, the margin to 20 MAD. You have divided your gain by 2.5 for a discount that looked modest. Think in dirhams of margin per unit, set a maximum discount you never exceed, and check it on every reseller quote before sending it.

Trap 3: the stock you discover by counting

Stock is kept in movements, not in inventories: each purchase increases it, each sale decreases it, each breakage, loss or gift is recorded. The total at any moment follows from the movements. If you only count at year end, you discover the gap without knowing where it came from, and the gap is always in the wrong direction. With an alert threshold per product (say five units for an item that takes three weeks to restock), you order before the stock-out, not after the missed sale.

Variants

A t-shirt in four sizes and three colours is twelve products, not one. Each variant has its stock, its threshold, and sometimes its cost. Grouping variants into a single item is the first cause of wrong inventories among textile makers.

The product invoice

A product sales invoice carries the same mandatory details as a service invoice, with a breakdown per line: description, variant (size, colour), quantity, unit price, line total. If you sell to individuals at a market or in a shop, a ticket or a receipt is enough, but the payment must be recorded like any other, the same day for cash. Cash revenue counts towards the ceiling and the tax exactly like a transfer.

Selling to a reseller or a company

The invoice carries the client’s ICE, and the amounts count in that client’s total for the withholding tax above 80,000 MAD a year. A regular reseller buying 8,000 MAD a month from you crosses the threshold in October: plan for it in your prices.

Two figures to look at every month

• The month’s real margin: sales received minus the cost price of products sold. That is what you earn, not revenue. A month at 30,000 MAD of sales with 24,000 MAD of cost is worth less than a month at 20,000 MAD with 9,000 MAD.
• The value of the stock: what you have tied up in materials and finished products. If it rises while sales stagnate, you are making or buying too much, and your cash is asleep on a shelf.

The 500,000 MAD ceiling, seen from a shop

With products, revenue climbs fast because it includes the cost of goods: selling 500,000 MAD at 35% margin means earning 175,000 MAD before your costs. So the ceiling arrives sooner than you think for a business that works. Track it like service providers track theirs, and read what happens when you exceed it before you get there. Retailers and artisans each have their page on what SoloGestion does for them.