When it comes to calculating profit margins in manufacturing sales, sales teams can only project a limited amount, especially with the time they are provided to create a quote. Yet, quoting has to be quick and accurate. This leads to a conundrum that can plague many manufacturers: how can you price your products or manufacturing services and take into consideration all the different factors, requirements, and profit margins that the business needs, while being fast and accurate?
The quick answer is that you cannot. Every customer has different requirements, with some requiring complex configurations to be done before a sales rep can create a quote. That will affect the sales cycle, and make real-time discounting and costing tough to manage.
There is a need for software that can help manufacturers increase the accuracy and speed of quoting, but still stay behind the scenes and allow sales reps to do what they do best: Increase revenue for the business.
One way to increase accuracy would be to implement continuous costing within the manufacturing sales solution. This helps to extend the capabilities of the sales team, as they can then know the projected profit margins through the comparison of specific project scenarios, set up within the software. That allows for margin projection and future planning of resources, which are always important for manufacturers.
With the integration and embedding of applications such as CAD, continuous costing can be achieved through the import of multi-level BOM, the support of accounting methodologies such as FIFO and LIFO, and ability for material cost changes to be reflected in real-time.
With the implementation of an end-to-end manufacturing sales solution, businesses can see the effects of a single factor on the cost and profit margins, and adjust accordingly before the quote is even sent out. Instant comparisons, intelligent feedback, and upselling opportunities can be highlighted to the sales reps who are working with new quote versions, in order to maximise profit margins.
Managing Discounts Using Pre-Determined Rules
Another method that manufacturing sales teams can use is to procure a manufacturing sales solution that can create tailored discounting rules specific to their business. There are various rules that can be applied within the software, from the setting of a fixed price range, to discounting by absolute amount or a percentage, to the approval process after a sales rep applies a discount. Parameters can be set to match business needs, as different manufacturers have different needs when it comes to the factor that will most affect their profit margins.
Discounting management benefits both sales managers as well as individual sales reps; sales managers can monitor sales activity and feel secure that consistent pricing is used throughout the department, while individual sales reps can feel confident in applying discounts, as there are guidelines already set up.
There’s no more confusion over maximum discount percentages, or the need for constant requests for special pricing; all of that is already set up within the solution to make the sales reps lives as easy as possible, helping them to sell faster.