Estimate Pricing

While you are creating an estimate, Aspire is automatically calculating and displaying prices at various levels based on the items or kits you place onto the services within the estimate. Initial prices are provided based on the underlying cost-associated items in the item catalog with markup and profit applied, but you can override those values based on specific circumstances as you refine the estimate.

Basic Pricing Calculation

When Aspire calculates the price for an item within an estimate, it applies markup, and profit margins have been defined on the Pricing Settings screen to the item cost which initially comes from the item catalog. For each line item, Aspire first calculates the total price (extended price) as follows:

Total Price = (Unit Cost * Item Quantity * (1 + Markup Percent)) / (1 - Profit Percent)

So, if the unit cost for the item is $10, the item quantity is 20, the markup is 50% and the profit margin is set at 20%, the calculation would be:

Total Price = ($10 * 20 * (1 + .5)) / (1 - .2) = ($200 * 1.5) / (.8) = $375

Once Aspire has determined the total price for an item, it divides that total price by the quantity to determine the unit price. In this case, supposing that there were 10 units being ordered, for the item in question, the unit price would be:

Unit Price = Total Price / Item Quantity = $375 / 20 = $18.75

Single Unit Pricing

The calculations that Aspire performs on their behalf become more complicated when you involve kits that package multiple items into a single item on the estimate. In these cases, particularly for work orders, situations arise where - due to production conversion factors and rounding – unit price may calculate differently for a large quantity than a small quantity. So, if the estimate is broken out, for example, by the front yard and back yard, and the same bush is being used in both cases – four items in the backyard and 25 in the front yard – there may be slight variations in the unit price between the front and backyard. If the company provides item-unit prices on the proposals or invoices to the client, this may cause confusion.

To address this problem, Aspire provides an alternate pricing approach called Single Unit Pricing that ensures consistent unit pricing when estimating an opportunity. In this case, rather than calculating the total price for each item on the opportunity, and then dividing it to calculate the unit price, Aspire calculates the unit price and then multiplies it to determine the total price. This method is less accurate and, in general, results in a slightly increased price, but provides the advantage of producing consistent unit prices on a single work order.

You can enable this option for any kit applied to an estimate by selecting the Force Single Unit Pricing checkbox on the Service Item Details screen for that kit on the estimate.

The article, Single Unit Pricing explains single unit pricing and its use more completely providing examples.