3 Ways Cost Estimating Software Can Improve Your Machine Shop’s Profits

My Post (14).pngCost estimating software, in a nutshell, helps your machine shop send out estimates or quotes that are consistent and have the right profit margin for your shop. Being able to do this with software makes your life, and the life of your estimator, much easier. Using cost estimating software in an ERP system can help your shop solve inconsistent pricing, make money on jobs, and improve your bottom line.

Solve inconsistent pricing


It’s hard to remember what you’ve quoted on every job your shop has seen. If you don’t quote certain jobs very often, it’s easy to end up giving different prices for the same type of job. A good ERP system will take care of this for you. You won’t have to remember how much you quoted on any particular job because it will be saved in the system. If you want to make a similar quote to one you’ve given in the past, an ERP system will also make that easy for you. All you have to do is pull up that past quote, tell the system you want to make another one like it, and adjust as needed for your current quote. You’ve got too many things to think about, so take memorizing past quotes off of that list. Instead, embrace giving consistent pricing on your shop’s quotes.

Make money on your jobs

The jobs you’re charging the most money for might not be the jobs that make your shop the most profit. It’s hard enough to estimate how much labor and materials will cost, but when you also add in your shop’s overhead, it can be very difficult to give a quote on a job that will be profitable. With ERP software, you can set it to automatically include your shop’s overhead and whatever rate or profit margin you want. That includes having different a rate for rush jobs, repeat customer discount, or anything else.

With a good ERP system, you can quote your jobs with all of this in mind. You can also look at current and past jobs and see how much money you made on them. Sometimes it’s helpful to only look at the profit you made on jobs to understand what kinds of jobs are good for your shop. Looking at profits can also help you decide if you need to change how your shop prices certain jobs.

Improve your bottom line

When your shop has consistent pricing that is designed to make a profit for your shop, your bottom line will grow. With ERP software, you can see how much your bottom line is growing and keep track of how various jobs are doing in your shop. See what jobs help your shop grow and which ones might not. Once you’ve got your shop to this point, you can start to think about other ways you want your shop to grow. Do you need a new machine? Do you want to increase your advertising? Hire more people? With a growing bottom line and the structure in place to support continued growth, you can guide your shop toward the next step, whatever that may be. – Read more

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