Quote Calculation: How Effort Turns into Profit

How do you arrive at a fair, economically sensible offer price?

With a carefully thought-out offer calculation. It’s the key to profitability—and often the difference between success and loss. In this article, we’ll show you how to professionally calculate your sales prices, which methods truly work—and give you a ready-to-use calculation template.

What is an offer calculation?

It’s the cost-accounting calculation of an offer price for products or services. A form of pre-calculation. The goal is to derive a market-appropriate, economically sound price—the so-called offer price—from the expected costs of a product or service.

All cost factors must be considered so that internal costs are covered and a reasonable profit is achieved. These include:

• Direct costs such as materials or manufacturing

• Overhead costs like administration or sales

• Profit margin

• Discounts like rebates and early-payment discounts

👉 Tip: Only when everything is included will you arrive at a price that’s attractive to customers and sustainable for your business.

How the offer price is set

Example Calculation Template

Calculation Step	Example Value (€)
Direct material costs	900
+ External services	100
+ Material surcharge (10 %)	100
+ Production wages	800
+ Production overhead (20 %)	160
= Manufacturing cost	2,060 €
+ Admin overhead	150
+ Sales overhead	150
= Total cost	2,360 €
+ Profit margin (10 %)	236
= List price	2,596 €
+ Early payment discount (2 %)	+53
+ Commission (2 %)	+53
+ Rebate (5 %)	+130
= Target selling price	2,832 €

👉 Tip: You can recreate this in Excel, your ERP system, or modern ERP software automatically.

The components of total cost

Total cost consists of direct costs (materials, production) plus overheads allocated to cost centers.

Role of cost-unit accounting

Cost-unit accounting assigns costs to individual products or services, enabling precise pricing and better cost control.

Comparison of calculation methods

Method	Use Case	Special Feature
Markup calculation	Manufacturing & trade	Overhead added by percentage
Reverse calculation	Sales & price strategy	Starts from market price and works backwards
Pre-calculation	Offer preparation	Base on planned values
Post-calculation	Project controlling	Checks actual costs after completion
Order calculation	Custom & project manufacturing	Specific to individual orders/projects

Pre- vs. post-calculation

• Pre-calculation: Before submitting an offer, based on planned costs.

• Post-calculation: After completion, analyzes actual costs vs. planned.

👉 Important: If you regularly sell services, you should calculate your hourly rate.

How to calculate your hourly rate

Essential for service-based businesses to ensure cost coverage and profit.

Hourly rate = (Fixed + Variable + Profit target)

/ Billable hours per year

Example:

• Fixed costs: €60,000

• Variable costs: €10,000

• Profit target: €20,000

• Billable hours/year: 1,400

Hourly rate = (60.000 € + 10.000 € + 20.000 €)

/ 1.400 € = 64,29 €

👉 Tip: Count only productive hours — exclude admin, acquisition, etc.

Including discounts and early payment termsSatisfaction Metrics

A good offer works for you and your customers.

Many forget that discounts reduce the actual selling price. Include them early in your calculation—not just during negotiation.

Example:

• List price: €3,000

• Discount 5 % → − €150

• Early-payment 2 % on €2,850 → − €57

• Effective price = €2,793

👉 Note: Discounts and early-payment terms significantly impact your margin—you need to include them upfront.

Cost planning (Plankostenrechnung) for higher margins

Cost planning gives clear insight into expected costs and sets the basis for realistic and competitive offers. It systematically captures all cost factors and helps analyze deviations after a project.

Recommendations:

• Record all costs precisely

• Include discounts & early-payment terms

• Use modern calculation tools like TOPIX

• Regularly review pre- and post-calculations

These steps help ensure your offer prices stay competitive and margins healthy.

Excel vs. Business Software

Tool	Advantages	Disadvantages
Excel	Free, flexible, ideal for simple setups	Prone to errors, not audit-proof
ERP/Accounting software	Automated, consistent, scalable	Needs matching to your business process

🎯 Fact: Robust calculation software enables quick, accurate quotes, improves pricing, and organizes data efficiently. TOPIX offers a fully integrated solution for quotes, orders, invoices, and more.

👉 Tip: If you prepare ≥10 offers/month, integrating ERP with costing is worth it—including accounting automation.

Conclusion: Calculate to win

Well-designed offer calculation is more than math—it’s strategy. It:

1. Covers costs

2. Protects margins

3. Builds transparency

4. Wins trust

5. Helps secure orders

Whether you use markup, discounts, reverse calculation, or hourly rates—the key is consistency, realism, and clarity.

👉 Extra tip: Before calculating, conduct market research and competitor analysis. Consider market conditions when setting your target selling price.

📝 Legal Note

This article is for general information only—not tax or legal advice. Though carefully researched, no guarantee of accuracy or completeness is given. For binding guidance, consult your tax advisor or legal counsel.