What is the list price and pocket price?

The pocket price, also known as the net selling price, refers to the final price after deductions for discounts, rebates, promotional offers, free freight, and any other concessions.

This price is significant in determining the profitability of a sales transaction, as it represents the actual revenue generated from the sale.

To calculate the contribution margin of a sale, one must subtract the cost of goods sold (COGS) from the pocket price.

The contribution margin represents the portion of the sales revenue that contributes to covering overhead costs and generating profit.

A higher pocket price, relative to the COGS, typically results in a higher contribution margin, indicating greater profitability for the seller.