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Price markup and contribution margin

  • 14 January 2021
  • 2 replies
  • 20 views

Userlevel 3
Badge +11

Hello, 

I have noticed an issue with existing Sales Parts and I am unsure of the correct way to apply a % increase to the price. Initially, I assumed I could use the contribution margin on a Sales Quotation to accomplish this, however, if the part is existing in your system, that is calculated automatically. 

The scenario below outlines the issue I am facing:

  1. Existing part number XYZ has a Cost of $4.55 and a Price of $18.35
  2. The system calculated Contribution Margin rate is 75.17%
  3. The customer has contacted us and stated they want 255 XYZ parts expedited and they would like to see a quote for this.
  4. We would like to add 20% to the price of the part for the expediting. 
  5. Our Sales team created a quote and modified the contribution margin. They changed it to 20%, which dramatically lowered the price.

Modifying the CM does not appear to be the correct method to markup a price of an existing part in this instance.

Is there a function in IFS that would accommodate this scenario? Any help would be greatly appreciated. 

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Best answer by paul harland 14 January 2021, 14:57

Hi @cjohnson 

If the requirement is to add 20% to the price, then why don’t they just add 20% to the price? maybe go into the price field and type *1.2 (would be the fewest keystrokes)?

The tool of being able to manage the CM is there in case there are defined minimums on margin. 

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2 replies

Userlevel 6
Badge +14

Hi @cjohnson 

If the requirement is to add 20% to the price, then why don’t they just add 20% to the price? maybe go into the price field and type *1.2 (would be the fewest keystrokes)?

The tool of being able to manage the CM is there in case there are defined minimums on margin. 

Userlevel 3
Badge +11

Hey @paul harland great idea! That addressed it perfectly. Thank you!

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