Net marketing contribution (NMC)

Definition (1):

Net marketing contribution (NMC) is a measure of marketing profitability that includes only components of profitability controlled by marketing.

NMC = net sales – the cost of goods sold – marketing expenses (The marketing expenses include sales expenses, promotion expenses, freight expenses, and the managerial salaries and expenses of the marketing function).

Definition (2):

Net marketing contribution (NMC) is a calculation that determines whether a company's current marketing strategy is enough to cover the costs associated with marketing and sales.”

Companies measure marketing profits in terms of it. It is composed of 3 chief elements: sales, gross margin’s percentage, and marketing & sales expenses or M&SE. The present market demand and the market share of your company are crucial factors in the calculation of the NMC. In the basic calculation of NMC, sales revenue is multiplied by the gross profit and then marketing expenses are subtracted from it. The calculation becomes more complicated when you try to determine your company’s actual sales revenue and gross profit in association with the market share and market demand.

Use of the term in Sentence:

  • The company has all the necessary information for calculating its net marketing contribution (NMC).
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