Profit Margin Pricing Method

When we developed the Quote Magician our needs were relatively simple.  We added together the cost of the garment and the decorating cost for each quantity and computed the selling price using the Profit Margin method.  We were simple folk then.  And to be honest we’re still simple folk today.  This method of pricing works for us.  But when we began to develop the system for use by distributors we realized that what worked for us wouldn’t necessarily work for everyone.  So we went about the process of adding the ability to control all aspects of the selling price.  But we did so with the express desire to not make it complicated.  The system had to be both powerful and easy to use and understand.  We think we found that balance.

We started by taking into account the elements that make up the selling price – this is, after all, pricing software to be used by salespeople.  The Selling Price can be derived by applying a profit percentage to the four main cost components of each selling price:

• Profit percentage can be applied to the Cost of the Garment
• Profit percentage can be applied to the Cost of the Decorating
• Profit percentage can be applied to the Cost of the Screen/Digitizing/Art/Setup Charges
• Profit percentage can be applied to the Oversize Items

Quote Magician gives you control over the profit percentage applied to each of these four components.  Here’s an example of a Catalog pricing screen for the Hanes 5170:

As you can see the cost of the item is $1.70.  This example shows a 3-color print for the first location and a 1-color print for the second location.  Each line of the Calculated Pricing shows a red line “cost” and a black line “selling price.” 

There are four separate lines of pricing shown – one line for the blank garment, one line for the first print location, one for the second print location and one for the setup charges.  All of these are added together at the bottom showing the total cost and total selling price.

On this pricing screen the Profit Margins are controlled at the bottom left of the screen.  In this example the Profit Margin percentage for the garment is 40%.  The percentage for the Decorating is 30%.  The Setup Charges percentage is 0%.  Finally, the Oversize percentage is showing as 25%.  However, there is a drop down box showing the options for the Oversize Pricing Method. 

There are five options here:

• Use Exact Difference in Cost – No Profit will be Added
• Round Up to the Nearest $0.25
• Round Up to the Nearest $0.50
• Round Up to the Nearest $1.00
• Add the Default Profit Margin Specified (in this case – 25%)

Depending on which option is selected, the pricing for the Oversize Items Available shown at the bottom right will change.  

You have full control over all aspects of the Selling Price.