In evaluating technologies for agricultural research, administering a complete household and agricultural survey may not be an effective approach because some of the interventions are done on small plots with few participants. Even where survey data on profitability exist, participatory evaluation may provide additional information on farmers’ perceptions, which then may be used to validate the survey data output or make comparisons.
Gross margin analysis is an alternative technique that can be used to calculate the profitability of technology. The measure focuses on variable costs and ignores the fixed or overhead costs since fixed costs will be incurred irrespective of the technology or level undertaken (Rural Solutions, 2012). Farmers do make decisions on what kind of technology may be economically efficient and technically feasible. Gross margin indicator may help in assessing technologies being developed for potential dissemination by comparing their benefits with conventional technologies .
Net income metric is derived from incomes and costs of production (variable and fixed or overhead costs). Costs of production includes variable and fixed costs of production such as labor, fertilizers, seed, feed costs etc.
Profitability measures the gains from the agricultural enterprise using data on revenues and expenses. This analysis may be done over a season, year, or multiple years depending on the objective of the research and the technology being assessed.