Breaking Down Selling Price Calculation: What It Means for General ERPs
Whether your team is quoting custom builds or setting prices for catalog items, getting the selling price right directly affects profitability. But when key inputs like labor, materials, and overhead live in different systems—or aren’t tracked at all—selling price becomes a best guess. ERP software should connect the dots, giving you the clarity to price confidently and competitively.
Defining Selling Price in a Manufacturing Context
Selling price isn’t just a list price or a simple markup on materials. In a manufacturing environment, it must reflect:
- Direct job cost – materials, labor, and subcontract work
- Overhead and burden rates – shared costs like machine time and facility expenses
- Target margin – what your company needs to make the job worth doing
- Customer-specific pricing rules – agreements, discounts, or service level requirements
Understanding these components ensures pricing isn’t too low to protect your margins—or so high that it loses the sale.
Key Cost Inputs You Need to Price Accurately
To calculate an effective selling price, your ERP system needs to automatically pull in accurate cost data:
- BOM material costs – linked to real-time inventory pricing
- Labor hours – estimated and actual per routing step
- Subcontract costs – tied to specific vendors or tasks
- Overhead and burden – applied based on department or machine time
- Scrap and yield factors – adjusting based on past production behavior
When your ERP tracks these costs per job or product, you can quote with confidence and learn from every order.
How ERP Helps You Calculate and Adjust Selling Price
An ERP system should help you do more than enter a price—it should help you arrive at one based on real numbers.
- View estimated vs. actual job cost to refine quoting accuracy
- Apply markup or margin formulas based on customer, part, or product line
- Link quotes, orders, and invoices for pricing continuity
- Use historical data to spot trends or adjust margins
ERP removes the guesswork by using live, job-specific cost inputs to generate and refine selling prices over time.
Why Real-Time Cost Visibility Protects Margins
Your profitability depends on catching margin drift early. Real-time ERP tools let you:
- Identify jobs where labor or materials exceeded plan
- Adjust future quotes to reflect true cost
- Compare customer profitability across segments
- Track average margins by part number, job type, or account
Without this visibility, pricing becomes reactive. With it, you can act before issues hit the bottom line.
Key Takeaways
- Selling price = job cost + margin, not just markup
- ERP should gather actual labor, material, and overhead data automatically
- Quoting and costing should be connected, not siloed
- Visibility into real-time cost helps preserve profitability
A good ERP system doesn’t just store the numbers—it helps you use them to make better decisions. With connected job costing, quoting, and invoicing, selling price becomes a strategic tool instead of a risky guess. Cetec ERP delivers that visibility from quote to cash. See how Cetec ERP helps manufacturers calculate and control selling price with full job cost visibility. Explore costing and quoting features.