Mastering Manufacturing Sales Quotes: BOM-Based Pricing Strategies for Optimal Profitability

Understanding BOM Calculations in Manufacturing

In manufacturing, **BOM-based pricing** relies on Bill of Materials (BOM) calculations to determine accurate costs and sales prices for produced items. These calculations, as detailed in Dynamics 365 Supply Chain Management, involve cost roll-ups and sales price computations initiated from the Calculations page. They generate item cost records within a costing version or order-specific records for sales quotes.

Key Features of BOM Calculations for Sales Quotes

BOM calculations enable precise costing for manufactured items by considering BOM versions, route versions, quantities, and sites. For sales quotes, order-specific BOM calculations create records showing calculated costs and sales prices without updating costing versions. This is crucial for **manufacturing sales quotes**, ensuring quotes reflect real-time production costs including components, operations, and overheads.

Profit settings and markups are applied based on cost groups, allowing a cost-plus approach. For instance, calculated sales prices incorporate percentages assigned to cost categories, vital for competitive quoting.

Order-Specific BOM Calculations in Practice

Within sales orders or quotations, order-specific calculations provide a BOM calculation results page with weight, cost, and price details. These can transfer directly to quote lines, streamlining the process. Tools like Cetec ERP support multi-level BOMs in quotes, qty breaks, and one-click quote-to-order conversion, enhancing efficiency.

Challenges in BOM Costing for Quotes

Discrepancies often arise, such as between BOM cost reports and opportunity quote manufacturing costs, potentially differing by hundreds on a $5K item due to setup variations. Accurate supplier pricing, volume discounts, and multi-level BOM management are essential to avoid underestimating costs, which impacts profitability.

Systems like LevaData emphasize updating BOMs for current prices and using automated roll-ups for complex assemblies to prevent errors.

Advanced Tools for BOM-Based Pricing

Solutions like Tacton's CPQ integrate sales BOMs with configuration rules for compliant quotes. BOM Connector offers production cost calculators, best-price engines, and repricing features to handle fluctuations between quote and order. OpenBOM facilitates sales BOM creation from modules for quick quoting.

CalcuQuote highlights sales BOMs for bundles, ensuring costing teams have reliable data.

Integrating Rent Invoices in Manufacturing Quotes

For manufacturers leasing equipment or facilities, incorporating **rent invoice** details into BOM-based pricing is key. Rent invoices for machinery should be factored as overheads in cost calculations. During quote preparation, allocate prorated rent invoice amounts based on usage, ensuring comprehensive costing. This prevents margin erosion; for example, add monthly rent invoice totals divided by production capacity to per-unit costs in Dynamics 365 BOM setups.

ERP systems like Cetec allow capturing miscellaneous charges, including rent invoices, alongside BOM materials for accurate job costing.

Best Practices for Accurate Sales Quotes

To optimize **manufacturing sales quotes**:

• Use active BOM and route versions with overrides for precision.
• Employ single-level explosion for standard costs.
• Mandate profit settings for consistent sales prices.
• Leverage multi-level BOM support and automated roll-ups.
• Regularly update for price changes and include ancillary costs like rent invoices.
• Implement CPQ for sales BOMs ensuring configurability and availability.

Streamlining Quote to Production

Effective BOM-based pricing transitions seamlessly to production. Cetec ERP's quote-to-order converts generate work orders, material requirements, and routers. This visibility from quote stage aids scheduling based on capacity and lead times, incorporating excess materials and procurement charges.

Tools like znt-Richter's BOM Connector automate supplier selection and repricing, maintaining accuracy post-quote.

Conclusion: Elevate Your Quoting Process

Adopting BOM-based pricing revolutionizes manufacturing sales quotes by ensuring accuracy, profitability, and efficiency. By mastering calculations, addressing challenges, and integrating tools with elements like rent invoices, businesses achieve competitive edges. Invest in robust systems to transform quoting from guesswork to precision engineering.