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Should the budget on the production codes include markup?

No. Enter cost price. If the price includes markup, calculate back, for example by dividing by 1.15 for a 15% markup.

No. The budget on the production codes should be cost price, that is, the cost without markup. If you only have the price to the client including markup, you calculate back to cost price.

How to calculate

  1. Find the markup that was used, for example 15%.

  2. Divide the amount including markup by 1 plus the markup. With a 15% markup you divide by 1.15.

  3. Example: NOK 115,000 including markup gives NOK 100,000 in cost price.

  4. Enter the cost price as the budget on the production code in Prod. codes. The budget field may be called Cost price estimate.

The estimate lines in an estimate under Estimate. 1 points to the cost columns Unit cost and Material cost with a total at the bottom, and 2 to the Production code column that links the lines to the production codes.

Good to know

  • The production codes show the cost side. Revenue and markup are tracked on the revenue side, for example in the revenue forecast and on Change Order Client.

  • If the markup is included in the budget, the cost becomes too high and the contribution margin (%) too low.

  • If the estimate lines have different markups, you must calculate back per line.

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