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Pricing Structures & Pricing Methods

You can find pricing settings under the Company Settings page in the main menu.

Real Build Pro's pricing methods provide a convenient way to customize the pricing on your estimates. While calculating an estimate, Real Build Pro will look at the project's chosen pricing structure and apply each of its pricing methods as necessary.

What is the difference between a pricing structure and a pricing method?

Pricing Structure: A pricing structure is a grouping of pricing methods.

Pricing Method: A pricing method is the actual line item applied to the estimate.

Property Description
Client Visible Choose whether or not to display the markup to the client.
Accounting The accounting code to apply the cost to.
Name The line item name that will be referenced on the estimate. Open book projects will display this to the client.
Description A description of the cost. This is not visible to the client.

Tip

You can always add or delete a particular pricing method from your estimate or budget line if it is not required.

How Pricing Methods Are Calculated

When it comes to determining how a pricing method gets applied to an estimate, there are two options:

Options Description
Apply Per Budget Line This option applies the pricing method to each new budget line. Pricing methods using this setting apply before any global pricing methods.
Globally Apply Per Estimate This option applies the markup across the entire estimate. Pricing methods using this setting apply after per budget line pricing methods.

Besides choosing what to apply the pricing method to, you must also choose how to apply it. To handle this, the pricing method algorithm takes into consideration two variables when creating a pricing method: Type and Applied As.

Type

The Type of pricing method affects how the amounts are categorized within your project.

Type Description
Profit The amounts derived when using this type of pricing method are categorized separately from the cost and tax amounts and added to the project's total profits.
Cost The amounts derived when using this type of pricing method are categorized separately from the profit and tax category and are added to the project's total costs.
Tax The amounts derived when using this type of pricing method are categorized separately from the cost and profit categories and are added to the project's total taxes.

Applied As

The Applied As variable gives you the option to calculate your pricing using either Markup or Margin. Use the dollar sign and percent sign toggle next to each Cost Category to specify whether to use an absolute dollar amount or a percentage amount when applying the pricing method.

Applied As Description
Markup The pricing method is applied against the cost.
Margin The pricing method is applied against the total.

Cost Categories

What your pricing method is being applied to (per line or per estimate) will also affect how the pricing method applies to each category.

When using Apply Per Budget Line, your pricing method will look at the category of each budget line, and if your pricing method uses that category (or the All category), it will be applied at the budget line level. If Globally Apply Per Estimate is chosen, then the pricing method will apply the amount entered against the category's total amount instead of per line.

Category Description
All Applies the amount to all categories. Entering an amount into a category below will override this amount on that category only.
None The amount entered into this field will be applied to the None category.
Materials The amount entered into this field will be applied to the Materials category.
Labor The amount entered into this field will be applied to the Labor category.
Subcontract The amount entered into this field will be applied to the Subcontract category.
Equipment The amount entered into this field will be applied to the Equipment category.
Other The amount entered into this field will be applied to the Other category.

Markup Examples

Calculating profit using markup as a percentage amount:

Subtotal: $100

Markup: 10%

Profit: $10 = Cost x Markup

Grand Total: $110 = Cost + Profit

Calculating profit using markup as a fixed amount:

Subtotal: $100

Markup: $10

Profit: $10 = Cost + Markup

Grand Total: $110 = Cost + Profit

Margin Examples

Calculating profit using margin as a percentage amount:

Subtotal: $100

Margin: 10%

Profit: $11.12 = Cost / (100% - Margin)

New Total: $111.12 = Cost + Profit

Calculating profit using margin as a fixed amount:

Subtotal: $100

Markup: $10

Profit: $10 = Cost + Margin

Grand Total: $110 = Cost + Profit

Quote

There is no difference between a $5 markup and a $5 margin except for the percentage.


Last update: September 29, 2020