Since a quote is a process that involves a series of calculations and information, preparing one ends up demanding extra attention from companies.
And one way to help professionals with this procedure is to build the cost composition of services correctly.
Not sure how to manage costs or prepare service orders correctly? In this post, see what cost composition is, why it matters, and the steps your company should follow to set a sales price more effectively. Check it out!
Service cost composition: what it is and why it matters
Service cost composition is a method used in preparing quotes for projects and services. In general, it covers the productivity rates and the material consumption required to perform a given task.
Cost composition brings many benefits to a quote. It gives professionals greater agility in performing calculations, helps reduce costs and direct teams, and contributes to estimating materials and equipment.
It also helps in preparing service orders and in accurately assessing deadlines.
In other words, through cost composition the company can anticipate all of its needs and, from there, plan the right investments for each service.
When preparing the calculation, managers are advised to use the company's own information as a baseline — that is, to measure employees' productivity rates and assess material consumption in order to build their own database.
How do you compose service costs? A step-by-step guide with 7 stages you need to follow:
# Before composing costs, it is important for the company to know the service. In other words, to identify the stages of the project and truly understand how its execution works. The ideal here is to provide a detailed description, gathering as much information as possible about the methods and processes.
# Next, management professionals should identify all the inputs needed to perform the services — that is, specify the type of labor, the materials, and also the equipment used.
# Once all the inputs have been identified, it is time to survey the costs of these materials. Here, management professionals should assess the amounts related to compensation for the activity, labor-related charges, and raw material purchases.
# The next stage is calculating the consumption of each element. Managers can do this by following the team during task execution — for example, recording how many hours were needed to perform a given service or measuring the quantity of materials used in production.
# After gathering all the information above, it is time to find the consumption rates of the materials. How? By calculating the quantity of inputs used to perform the service.
# Finalize the unit price of the activity by multiplying the quantity of products produced by their unit cost. If the goal is to find the total cost of a service, then add up the total cost of each input.
# All of these processes are present in your day-to-day, though perhaps not exactly in this order. The point is to stay attentive so that everything is executed and properly managed. For that, it is essential to have a management tool that automates everything from the sale of the service to pricing, customer relationships, contract management, service billing, and project closing. We recommend you try iZY, the most complete service management tool you have ever seen.
Although maintenance, machine depreciation, outsourced labor, and other indirect costs do not enter into a service's unit composition, it is important for managers to consider these amounts when closing out total costs.
Likewise, they should evaluate and also factor in the profit margin the company intends to add.
Did you like this topic? If you still don't know how to compose service costs or how to prepare service orders correctly, download this eBook right now. It's quick, completely free, and the material will help you plan and manage services more efficiently!
Originally published in Portuguese at useall.com.br.