Unclear cost price
The price is given to the client from the gut. On recalculation it turns out the project barely covers its costs, or is made at a loss.
An anonymised case study of a furniture and components manufacturer. No names and no prices, only the market, its cost price problem and how it could work better.
This study is based on a real conversation with someone in the market. All data is anonymised.
Furniture and component manufacturers design, cut, edge band, drill and pack products for themselves and for others. There is no furniture standard in the market, so everyone calculates in their own way, and the true cost price is hard to work out. Yet it is exactly the cost price that decides whether a project earns money or is made for nothing.
A client sends an order, usually an Excel with part sizes and materials, or a drawing. To price it, the company first has to model the project in its own program, and only then gets a material table. The cost price is then derived by hand. Material prices sit in a separate Excel database with many manufacturers, and hardware codes in the European and the local catalogue often differ.
Only one technical person can calculate accurately, and they keep it all in their head. While they calculate, the whole company waits, and the client often already picks someone faster.
The price is given to the client from the gut. On recalculation it turns out the project barely covers its costs, or is made at a loss.
A large project takes 3 to 4 days to calculate. That slows every quote and holds up production.
In this market a price is often returned only in 10 to 15 days. Whoever answers faster gets the order.
Hardware codes differ between the European and the local catalogue, so someone has to match them by hand.
Only one experienced technician can price accurately. Without them the process stops and the company cannot grow.
Imagine a tool where you drop in the client's Excel and it lays out the numbers itself and shows whether the project will actually earn.
Reads the specification the client sent and calculates square metres by thickness and hardware quantities.
Pulls prices from your database and automatically adds assembly, installation and design percentages.
You see the cost price and the client price at once, so you know your real margin before you send the quote.
The result: a clear cost price and a fast quote that any team member can prepare, not just one technician.
A clear cost price means you stop working for nothing and see the profit before you sign.
You send the quote before your competitors, so you win more orders.
The whole team and partners calculate the same way, with fewer mistakes.
Calculation no longer depends on one technician, so the company can take on more work.
The cost price becomes clear only once the project has been designed, so the price is given to the client before anyone knows what the product actually costs.
There is no common standard for calculating cost price. Two similar companies price the same product differently, so there is nothing to compare your own number against and the error stays invisible.
The specification is imported from Excel, prices are assigned automatically, and the result shows two figures at once: the cost price and the price for the client.
Projects stop ending at zero or at a loss, and the client gets an answer in minutes while the market norm is ten to fifteen days.
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If in your projects the cost price becomes clear too late, let's talk. Together we will look at how this could work in your company.