Choice of sheep management system alters both production potential, and the production risk due to variability in seasonal conditions. This study quantified production and gross margins from Merino ewe based systems varying stocking rate, time of lambing and the proportion of ewes joined to Terminal or Merino rams. Simulation studies were conducted between 1971 and 2011 using the AusFarm decision support tool for a grazing property in southern New South Wales. Joining between December and May resulted in higher gross margins than in other months due to higher numbers of lambs sold combined with a lower requirement for supplementary feeding. More ewes could be carried per hectare for April compared with February joining to achieve the same midwinter stocking rate and risk of feeding. Self-replacing systems could produce similar median gross margins as those with replacement ewes purchased, but gross margins were sensitive to the cost of replacement ewes. Of the systems compared, February joining to Merino rams produced the lowest gross margins at all stocking rates, but this system also had the least variability between years. The advantage of different systems was dependent on seasonal conditions which altered lamb production and supplementary feeding. The median ranking of systems for gross margin generally did not alter with changes in feed, sheep or wool values. Large increases in gross margins can be achieved through use of Terminal rams, optimal stocking rates and time of lambing, but the superiority of any depended on production system, price assumptions and seasonal conditions.