How do I adjust shop supplies and understand markup vs margin in ShopView?
ShopView offers users the ability to adjust shop supplies settings and provides clarity on pricing calculations using markup. Here’s how you can manage these aspects effectively:
Adjusting Shop Supplies Percentage
Shop supplies can be adjusted in three different areas based on your needs:
Global (default) rate: - Navigate to the Location Settings. - Update the shop supplies percentage for the desired location. This becomes the default percentage applied to all transactions unless overridden.
Customer-specific override: - Open the customer’s profile within ShopView. - Assign a specialized shop supplies rate to override the global default for that particular customer.
Specific Work Order override: - Access the Work Order in question. - Using the Financial Card located at the lower left of the screen, override the shop supplies for that specific order to set a specific amount.
Understanding Markup vs. Margin Calculations
To make informed pricing decisions, it’s important to clearly understand the difference between markup and margin. While they are closely related, they are calculated differently and serve distinct business purposes. ShopView is designed to support both approaches and keeps them aligned automatically.
What is Markup?
Markup is the percentage added on top of the cost of a part or service to determine the selling price. It answers the question: How much more than cost am I charging?
Example conceptually: Cost-based pricing
Markup is calculated from the cost
What is Margin?
Margin represents the percentage of the selling price that is profit. It answers the question: How much of the final price is profit?
Example conceptually: Profit-based pricing
Margin is calculated from the selling price
How ShopView Handles Markup and Margin
ShopView gives you the flexibility to work in either markup or margin, depending on your pricing strategy:
You can set pricing using Markup or set pricing using Margin.
When you enter or adjust markup, ShopView automatically recalculates and updates the corresponding margin.
When you enter or adjust margin, ShopView automatically recalculates and updates the corresponding markup.
This ensures pricing consistency and eliminates manual recalculation, allowing you to focus on strategy rather than math.
Key Takeaway
Markup and margin are two ways of expressing profitability. They are mathematically linked, and ShopView keeps them synchronized in real time. Choose the method that aligns best with your business goals, ShopView will handle the conversion for you.
Example:
If a part costs $100 and you enter a 20% markup:
ShopView adds $20 to the cost, making the selling price $120.
The resulting margin, displayed on the interface for reference, is approximately 16.67% (not 20%).
This is because markup and margin use different formulas. While markup is based on cost, margin is based on the selling price. Ensure your pricing preferences reflect this difference.
By following these steps and understanding the calculations, you can confidently manage shop supplies adjustments and pricing.
Related Topics
Adjusting location-based default settings
Customizing rates for customers
Differences between markup and margin pricing calculations