Calculation rules
The Quotes tab prices every line with the formula set on the company and the values on the estimate. The page shows the results as you type, and Skills Workflow recalculates the totals when you save.
Which formula applies
The company's Estimate Calculus Type sets the formula for resources and expenses. Service Estimate Calculus Type sets it for services. A company saved without a Service Estimate Calculus Type takes its Estimate Calculus Type.
A payment condition can have its own Service Estimate Calculus Type. Services lines with that payment condition use it.
There are five formulas: Default, Markup, MarkupWithVat, MarkupWithVatAndMargin and MarkupOnlyOnVat.
Where the values come from
| Value | Where it comes from | Used for |
|---|---|---|
| Inflation % | The estimate's Info tab | Resources, services and expenses |
| Overheads % | The estimate's Info tab | Resources |
| Resource Margin % | The estimate's Info tab | Resources |
| Supplier Margin % | The estimate's Info tab | The Commission % of a new services line |
| FTE | The estimate's Info tab | Utilization of resources |
| Rate Card and Rate Card Column | The estimate's Info tab | Table Rate and Unit Cost of resources |
| Rate Card Column Sell | The estimate's Info tab | Unit Income of resources, when the rate card has a sell value for the role |
| Price Table and Price | The estimate's Info tab | Unit Cost of services, by service |
| Agency commission | The client, by service | Commission % of a services line on that service |
| Tax | The deliverable | VAT of every line in it |
Resources
A resource line takes its Table Rate and Unit Cost from the rate card, for its typology group, user, department and the deliverable's market.
Without a discount or a typed Unit Income, its Unit Income follows the Unit Cost:
| Formula | Unit Income |
|---|---|
| Default, MarkupOnlyOnVat | Unit Cost × (1 + Inflation %) × (1 + Overheads %) × (1 + Resource Margin %) |
| Markup, MarkupWithVat, MarkupWithVatAndMargin | Unit Cost × (1 + Inflation %) × (1 + Overheads %) ÷ (1 − Resource Margin %) |
When the rate card has a sell value for the role in the Rate Card Column Sell, the Unit Income is that value.
The totals follow the hours:
- Total Cost = Unit Cost × Hours
- Total Sell = Unit Income × Hours
- Utilization = Hours ÷ FTE
Services
Total Cost = Unit Cost × #Cost, less the line's discount. The discount is the line's Discount %, or the payment condition's discount when the line has none.
When you change #Cost, #Income takes the same value.
A new services line works out its Unit Income from its cost and its Commission %:
| Formula | Unit Income |
|---|---|
| Default, MarkupOnlyOnVat | Total Cost × (1 + Inflation %) × (1 + Margin %) × (1 + Commission %) ÷ #Income |
| Markup, MarkupWithVat, MarkupWithVatAndMargin | Total Cost × (1 + Inflation %) × (1 + Margin %) ÷ (1 − Commission %) ÷ #Income |
Margin % is the line's own negotiation margin, and is usually 0. Lines on a Client Direct payment condition, and lines with a 100% discount, follow other rules.
The Unit Income is worked out again when you change the Commission % or the Margin %.
On a saved line, changing the cost or the quantity keeps the Unit Income, and the Commission % changes. On a company with Fixed Margin Percentage, the Unit Income follows the cost every time.
Typing the Unit Income or the Total Sell keeps that price and works out the Commission % and Commission from it. A typed Total Sell sets Unit Income = Total Sell ÷ #Income.
Expenses
Expenses are sold at cost plus inflation:
- #Income = #
- Unit Income = Unit Cost × (1 + Inflation %)
- Total Cost = Unit Cost × #, less the line's discount
An expense line without a discount has Total Sell = Unit Income × #.
VAT
VAT applies to a line with no payment condition, or with a payment condition that has Has Tax. The rate is the deliverable's Tax.
| Formula | Total Income With Tax |
|---|---|
| Default, Markup | Total Sell × (1 + VAT) |
| MarkupWithVat, MarkupOnlyOnVat | Total Sell ÷ (1 − VAT) |
| MarkupWithVatAndMargin, services | (Total Sell − Commission) ÷ (1 − Commission % − VAT) |
| MarkupWithVatAndMargin, resources | (Total Cost + overheads) ÷ (1 − Resource Margin % − VAT) |
For resources under MarkupWithVatAndMargin, overheads = Overheads % × Unit Cost × (1 + Inflation %) × Hours.
These rules don't cover lines on a Client Direct payment condition, expenses under MarkupWithVatAndMargin, or resources priced from the Rate Card Column Sell under MarkupWithVatAndMargin.
Rounding
With Apply unit price round on the company, unit prices are rounded to the decimals of the currency's price.
Deliverables
- Total Cost = the sum of the lines' Total Cost × Rep. Number
- Total Income = the sum of the lines' Total Sell × Rep. Number, plus the agency commission, less the deliverable's Discount
- Final Margin = Total Income − Total Cost
- Final Margin % = Final Margin ÷ Total Income
Rep. Number is shown on retainer estimates only. It starts at the number of months between the deliverable's Start Date and End Date. On other estimates it is 1.
Estimate summary
- Total Income and Total Cost are the sums of the deliverables.
- Final Margin % = 1 − Total Cost ÷ Total Income.
- In By line type, the sell of each line type is the sum of its lines' Total Sell × Rep. Number × (1 − the deliverable's Discount %). Its cost is the sum of the lines' Total Cost × Rep. Number, and its % is 1 − cost ÷ sell.
The billing plan and buy condition rules are in Approval and billing and Buy conditions.