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Estimate your real gross margin (front margin, back margins, shrinkage) and the recoverable EBITDA, by store format, in seconds.
Indicative simulation based on GMS sector benchmarks. Calculations run in your browser: no data is sent. For a precise figure and an action plan, the next step is a margin audit.
by bringing unknown shrinkage back to the format target. Theoretical maximum: in practice aim for 50 to 80 % of it with a monthly per-department plan.
Quick answer
Real margin is calculated on the triple net price: list price − on-invoice discounts (net) − conditional rebates (double net) − payments for commercial cooperation services (triple net). For the retailer, real margin = front margin + back margin − shrinkage. Example: a product listed at €4.00 excl. VAT, invoiced at €3.90, with €0.40 of off-invoice benefits, costs €3.50; resold at €5.00 excl. VAT, the front margin is 22%, the back margin 8%, total margin 30%.
Reviewed by Samuel Hayot, chartered accountant (Ordre des experts-comptables), last updated
In the annual negotiation between a supplier and a French retail chain (GMS, grandes et moyennes surfaces), the list price (prix tarif) is never the price actually collected. The invoiced net price deducts on-invoice discounts. The double net also deducts conditional rebates (year-end, volume-linked). The triple net (“3x net”) finally deducts the fee for commercial cooperation services (coopération commerciale) bought by the supplier: promotions, end-of-aisle displays, catalogues.
The front margin (marge avant) is the gap between the consumer price excl. VAT and the invoiced net price. The back margin (marge arrière, or NIP, négociations hors facture) covers benefits obtained off-invoice: rebates and commercial cooperation. The retailer’s real margin adds both, then deducts shrinkage (breakage, theft, errors, expired products), which only shows up at stock count.
For the supplier the logic is symmetrical: what matters is triple net revenue and the margin on that price, after logistics costs and promotion funding. The simulator above is built from the store’s point of view (front margin, back margin, shrinkage by format); the example below links both readings on the same product.
The effective purchase price is defined in article L. 442-5 of the French Commercial Code; the 10% uplift comes from the ordinance of 12 December 2018, extended until 15 April 2028 by Law no. 2025-337 of 14 April 2025. In the simulator, front margin, back margin and shrinkage are entered directly as a percentage of revenue: it does not rebuild the triple net product by product.
The method works for a supplier who wants to know its true selling price and for a store that wants to know its true margin. Do it per product first, then consolidate.
The annual agreement (convention unique) or multi-year contract sets the list price, on-invoice discounts, conditional rebates and the priced list of commercial cooperation services. It is the only reliable base: anything negotiated verbally or mid-year must be added by amendment.
Apply on-invoice discounts, then year-end rebates at the rate you will actually reach (not the top tier), then commercial cooperation per unit sold. For a supplier this is the price really collected.
For food resold as is, the consumer price may not fall below the effective purchase price plus 10%. Run it including taxes and transport, then check that planned promotional prices stay above it.
Express every component as a percentage of the selling price excl. VAT so they can be added. For the retailer, then deduct shrinkage; for the supplier, deduct logistics costs, penalties and promotion funding.
Aggregate by department (store side) or by retail customer (supplier side) and compare monthly with the agreement. Rebate tiers not reached and cooperation services not delivered are the most frequent gaps between theoretical and real margin.
A manufacturer sells a food product at a €4.00 list price excl. VAT with a 2.5% on-invoice discount, and grants off-invoice €0.16 of year-end rebate and €0.24 of commercial cooperation per unit. Its production cost is €2.80. The store resells at €5.00 excl. VAT (5.5% VAT, transport ignored for simplicity). The resulting percentages match the simulator’s “Supermarket” preset.
| Step | Calculation | Result |
|---|---|---|
| Invoiced net price | 4.00 × (1 − 2.5%) | €3.90 excl. VAT |
| Triple net price | 3.90 − 0.16 − 0.24 | €3.50 excl. VAT |
| List to triple net gap for the supplier | (4.00 − 3.50) ÷ 4.00 | 12.5% |
| Supplier margin on triple net | 3.50 − 2.80 | €0.70 (20% of price) |
| Raised SRP (SRP+10), taxes included | 3.50 × 1.055 × 1.10 | ≈ €4.06 incl. VAT (€3.85 excl.) |
| Store front margin | (5.00 − 3.90) ÷ 5.00 | 22% |
| Store back margin | 0.40 ÷ 5.00 | 8% |
| Total margin on price / markup on cost | 1.50 ÷ 5.00 / 1.50 ÷ 3.50 | 30% / 42.9% |
| Price multiplier | 5.275 incl. VAT ÷ 3.50 excl. VAT | ≈ 1.51 |
| Maximum value promotion (34% cap) | 5.00 × (1 − 34%) | €3.30 excl. VAT, below the raised SRP |
| Store with €8M revenue, 1.4% shrinkage (simulator) | 22% + 8% − 1.4% | 28.6%, i.e. €2,288,000 |
| Recoverable EBITDA if shrinkage returns to 1% | (1.4% − 1%) × 8,000,000 | €32,000 |
Supplier reading: the list price shows €1.20 of unit margin, the triple net leaves only €0.70. Negotiating on list price without costing off-invoice benefits overstates margin by more than 70%. Retailer reading: on this product a 34% promotion is legally capped but economically impossible, since €3.30 excl. VAT would fall below the €3.85 raised SRP; the discount actually available is about 23%. Finally, each tenth of a point of shrinkage above target is worth €8,000 a year for an €8M store.
These measures are temporary and regularly extended. Check their status before each annual negotiation round.
| Measure | Rule | Known end date at 26/09/2026 |
|---|---|---|
| Raised SRP (SRP+10) | Food and pet food resold at no less than effective purchase price × 1.10; also applies to private-label products | 15 April 2028 (Law no. 2025-337) |
| Value promotions, food | Consumer promotional benefits capped at 34% of the selling price | 15 April 2028 |
| Volume promotions, food | Promotional operations capped at 25% of the agreed forecast volume or revenue | 15 April 2028 |
| Promotions on DPH (household, perfumery, hygiene) | Cap extended to DPH since 1 March 2024; value cap raised to 40% by the 2025 law (entry-into-force details to be checked) | 15 April 2028 |
| General ban on resale at a loss | Resale below effective purchase price prohibited, save legal exceptions (sales, liquidation, perishable goods at risk...) | Permanent (art. L. 442-5 Commercial Code) |
The 2025 law is sometimes wrongly called “EGalim 3”: that label normally refers to the law of 30 March 2023 on commercial relations. Further reforms of commercial negotiations have been debated since; their adoption and content should be checked at the time of reading.
Calculating margin on list price
A supplier reasoning on list price ignores discounts and off-invoice benefits. In the example, the apparent €1.20 margin drops to €0.70 at triple net.
Confusing margin on price and markup on cost
A €1.50 margin is 30% of the selling price (taux de marque) but 42.9% of the purchase cost (taux de marge). Comparing one chain’s margin on price with another’s markup on cost leads to wrong conclusions.
Adding percentages computed on different bases
A 2.5% discount on list price and a 4% rebate on invoiced net cannot be added as is. Convert everything into euros per unit, then into a percentage of selling price.
Forgetting the raised SRP in promotions
The 34% cap does not allow a promotion that takes the price below effective purchase price plus 10%. For low front-margin products, the SRP sets the real limit.
Leaving shrinkage in the blind spot
Unknown shrinkage only appears at stock count. Without rolling counts by department, a store can discover at year-end a gap of several tenths of a margin point, i.e. tens of thousands of euros.
The triple net is the price the retailer really pays: the invoiced net price less conditional rebates and commercial cooperation fees. Example: €3.90 invoiced, €0.16 rebate and €0.24 cooperation give a triple net of €3.50. It is the basis of the loss-leader threshold.
Front margin is the gap between the selling price excl. VAT and the net price on the purchase invoice. Back margin covers benefits obtained off-invoice: year-end rebates and commercial cooperation. In the example, 22% front margin and 8% back margin give a 30% total margin on selling price.
Take the effective purchase price (triple net plus turnover taxes, specific taxes and transport) and multiply it by 1.10. With a €3.50 triple net excl. VAT and 5.5% VAT, the minimum selling price is about €4.06 incl. VAT. The rule targets food and pet food resold as is.
Yes. Introduced experimentally in 2019, the 10% uplift of the loss-leader threshold has been extended several times, most recently by Law no. 2025-337 of 14 April 2025, until 15 April 2028. That law also states that the ban on resale at a loss applies to private-label products.
For food, promotional benefits may not exceed 34% of the consumer selling price, and promotional operations 25% of the agreed forecast volume or revenue. The cap also covers DPH products since March 2024, with the value cap raised to 40% by the 2025 law. These rules are extended until 15 April 2028.
Margin on price (taux de marque) divides the margin by the selling price excl. VAT; markup on cost (taux de marge) divides it by the purchase cost. For a product bought at €3.50 and sold at €5.00 excl. VAT, the €1.50 margin is 30% on price and 42.9% on cost. Retail usually reasons on price.
The multiplier divides selling price by purchase price. In French retail it is often expressed from selling price incl. VAT to purchase price excl. VAT: €5.275 ÷ €3.50 gives about 1.51. The excl./excl. multiplier is 1.43. Always state the convention before comparing two multipliers.
Start from the chain’s triple net revenue, then deduct product cost, customer-specific logistics, any penalties and promotion funding. A high-volume customer can turn out less profitable than a smaller one once all off-invoice benefits are added back.
First measure known and unknown shrinkage by department with rolling stock counts, then target sensitive departments (high-value items, fresh produce). In the simulator, bringing shrinkage from 1.4% to 1% on €8M of revenue frees €32,000 of theoretical EBITDA; in practice only part of it is recovered.
In large retail, the visible front margin is only part of the story. The real gross margin combines the front margin, the back margins (year-end rebates, booked as a reduction of purchase cost in account 609, and commercial cooperation, invoiced to the supplier as a separate service) and, in the other direction, unknown shrinkage (theft, errors), which is only revealed at inventory. Reading these three lines together, by department and by store, is what separates a steered chain from one that only watches consolidated revenue.
A clear margin reading lets you:
Hayot Expertise reads your margin by department and by store, secures the accounting of back margins and shrinkage, and structures multi-store groups. We turn the figures into an action plan, not a report.