Discover how to effectively automate costs and margins in SecturaFAB. The cost settings are used to define the margin and the overall cost model you wish to use in SecturaFAB.
Let's explore how.
Contents:
Cost Model
1. Select “Quote Details” within the “Preferences and Costs” settings.
2. Let’s dive into important cost settings first. Select “Edit” to make changes.
3. Different costing models will calculate the quoted labor costs.
Labor Rate
With the “Labor Rate” option selected, the unit cost and unit price of a quote item will be calculated using the Cost and the Rate value of the cost record.
Cost with Margin
With the “Cost with Margin” option selected, the quote item cost will be calculated using the cost while the price will be calculated using either markup or margin.
4. Another important setting to note for costs is “Shipping Cost Type.” This allows you to set how shipping is calculated. These options include “Line Item” and “Distribute.”
5. Let’s define this setting.
- Line Item: The “Line Item” option will add the shipping cost as a separate line item in the quote.
- Distribute: The “Distribute” option will add the shipping cost to each item in the quote. Note, that with this option selected, the shipping costs will be divided based on the item’s true weight.
5. Another important setting to note is “Use Product Weight Cost.” By default, weight costs have a material and thickness assigned to them. The material and thickness field in the Cost Table is used to determine the cost value that should be used for an item that has a material cost. If "Use Product Weight Cost" is set to Yes and a product with the same material properties is found, then that material cost will be used.
Define Margins
Defining margins for material, operations, and hardware is essential for pricing consistency and profitability. SecturaFAB makes it easy for you to set up each. Let’s discover how.
1. From the “Quote Details” settings within “Preferences and Costs” you can set default margins. Let’s start with material. Depending on the profit model, this will be either a margin or a markup when calculating the material cost of a line item. The formula used is:
Material Price = Material Cost * weight / (1 - Material Margin %)
Material Price = Material Cost * weight * (1 + Material Markup %)
In this example, our profit model is margin. You can default all material costs on a quote to have a margin of 12% as shown. Find out more about the profit models in our resource center.
2. Now that you have set the material margin, let’s set the operation margin. The operation margin is used to calculate the price of a line item. Here’s how. When calculating the operation price for a quote, depending on the pricing model, the following formula is used:
Operation Price = Labor Rate * Time / (1 - Operation Margin %)
Operation Price = Labor Rate * Time (1 + Operation Markup %)
3. Outsource and Hardware margins can also be defaulted from the quote details screen. In this example, we will use 12% for our outsource margin and 7.5% for the hardware margin.
When adding an item as an Outsource or Sub Contract operation, the margin will default to this value.
When adding a component to a quote the margin set for hardware will default to this value.
4. Alternative to the margin options above, you can set [LC1] a quote margin or markup depending on the profit model. The margin is applied after the material and operation costs are calculated. The formula used is:
Price = (Material Price + Operation Price) / (1 - Margin %)
Price = (Material Price + Operation Price) * (1 + Markup %)
Now that you know how to set up costs, let's explore how to automate costing with cost lookups.
Cost Lookup
1. Select “Cost Lookup” from the “Costs” settings. Cost lookups allow you to replace a cost based on a condition.
2. Select "Add" to create a new cost lookup.
3. Choose a lookup cost that will be replaced by the substitute cost.
Here's a brief overview of the lookup:
- Material: Replaces the costs based on material type.
- MaterialAndThickness: Replaces the costs of an item based on material and thickness.
- HasBevel: Replaces the costs of an item that has a bevel edge.
- Weight: Compares the unit weight of the item with the value in the Value1 field.
- TrueWeight: Compares the unit true weight of the item with the value in the Value1 field.
- TotalWeight: Compares the total weight of the item with the value in the Value1 field.
- TotalTrueWeight: Compares the total true weight of the item with the value in the Value1 field
- TotalTime: Compares the total primary operation process time of the item with the value in the Value1 field.
- ItemTime: Compares the unit primary operation process time of the item with the value in the Value1 field.
- Area: Compares the unit area with the value in the Value1 field.
- Total Area: Compare the total area of the item with the value in the Value1 field.
An example of how you can create a cost lookup is as follows:
Material Cost Lookup:
To account for the different labor rates of my laser for stainless steel material I will use a cost lookup.
I choose the Lookup Cost as my standard Laser cost and the Substitute Cost is "Laser - SS."
I set the Lookup Type to Material and the Material to Stainless Steel.
I click create.
Weight Cost Lookup:
To charge for the extra weight of mild steel angle I will use a cost lookup.
I choose Lookup Cost as my standard “Weight-Angle-MS” and the Substitute Cost will be "MS-Weight"
I set the Lookup Type to Weight and the Material to MS.
I add a value of 150 to the Value1 field.
I click create.
Congratulations! You now know how to automate costs in SecturaFAB.