Reading the Estimated Margin and Profit on a Quote in EDGEBIC

EDGEBIC prices a quote from a capacity simulation, then shows profit and margin on the same row, so you know whether the number is worth sending before it leaves the building. In EDGEBIC by User Solutions, profit is total price minus effective total cost, and margin is that profit as a percentage of the price. Because the cost half of the equation comes from a real finite capacity schedule rather than a spreadsheet guess, the margin you read is anchored to the plan the shop will actually run. This article covers the exact math, the color rule that turns margin into policy, and how the manual override changes the basis without hiding it.

The two numbers and where they come from

Two calculated figures sit on every simulated quote.

Estimated profit is total price minus effective total cost. Total price is the unit price times the quantity, and effective total cost is the rolled-up cost of the job (or your manual override, covered below).

Estimated margin is profit divided by total price, times 100. When the total price is zero, margin reads as zero rather than dividing by nothing, which is why an unpriced quote shows a flat 0 percent until you either type a price or let markup derive one.

Neither number is typed by hand. Both recalculate the instant the price, the cost, or the quantity moves, so the margin on screen is always current with the inputs above it.

What "effective total cost" actually means

The cost side deserves care, because it is where quotes quietly go wrong. Effective total cost is the manual cost override when one is set, and otherwise the estimated material cost plus the estimated labor cost from the simulation.

Labor and material are the only two cost lines. There is no overhead line, no standard cost, and no separate contribution figure to reconcile. Labor is each work center's allocated work hours times its rate. Material comes from material-type routing steps, or falls back to the product's unit cost times quantity. Add them and you have the cost the margin is measured against. Keeping the cost model this simple is deliberate: two lines you can trace beat five lines nobody trusts. For the full cost mechanics, see pricing a quote from the schedule.

A worked example

Acme wants 200 units of Widget-A. The simulation allocates a saw, a mill, and an assembly step and rolls up the cost:

The planner quotes $85 per unit. The margin math follows directly:

Total price   = $85 x 200        = $17,000
Effective cost                    = $9,230
Estimated profit = 17,000 - 9,230 = $7,770
Estimated margin = 7,770 / 17,000 = 45.7%

At 45.7 percent the margin cell paints green, and the planner sends the quote knowing both the price and the profit behind it. Had the planner left the unit price at zero, the default 25 percent markup would have derived $9,230 times 1.25, divided by 200, or $57.69 per unit, which is the floor price at that markup and the starting point for any negotiation.

The color rule is a pricing policy you can see

The margin cell is color coded, and the thresholds are fixed: green above 20 percent, amber above 10 percent, red when negative. The value of the coloring is not decoration. It is a shared policy that every quote is measured against the same way.

• Green is clear to send.
• Amber is get approval before it goes out.
• Red is do not send.

When a rush job or an aggressive negotiation drops a quote into amber, the color makes the decision visible to whoever needs to approve it, instead of leaving the judgment buried in one salesperson's head. Over hundreds of quotes, that consistency is worth more than any single price.

Why a green margin can still lose money

A green margin is only as honest as the cost underneath it, and the single most common way a quote lies is a missing work center rate. EDGEBIC prices labor as work hours times each work center's rate, so a production work center left at a rate of zero contributes real hours but zero dollars. The cost looks small, the margin looks green, and the real job is not profitable.

Two habits keep the margin trustworthy. Put a rate on every production work center, and model material as material-type routing steps rather than leaning on the unit-cost fallback, which prices only the end product's own cost and misses the material inside a multi-component product. Get those two right and the color means what it says. This matters most for a product built from sub-assemblies, whose real work and material live in child routings.

The override changes the basis, not the truth

Some costs live outside any routing: tooling wear on a hard alloy, an expected scrap allowance, freight on an oversized part. The manual cost override is the right tool for these. Enter the all-in cost basis and EDGEBIC computes profit and margin from it, while keeping the calculated labor and material split on the record.

That retained split is the point. A 50-piece casting that simulates at $17,400 might carry $2,000 of tooling wear and scrap the schedule cannot see. Set the override to $19,400, and margin now computes from $19,400 while the $14,400 labor and $3,000 material breakdown stays stored for later variance analysis. A hand-bumped unit price would show the same margin but hide the reason forever. The override keeps the margin honest and the reasoning visible.

Margin is a snapshot: refresh before you rely on it

A margin is only as current as the simulation behind it. Capacity and rates move daily, so if a work center's rate changes after you simulate, the quote view shows a banner asking you to refresh and re-run before sending. The cost half of the margin, and therefore the margin itself, can shift when you do. A margin read off a stale simulation is fiction, which is one more reason the default quote expiry is 30 days.

The takeaway

Reading margin and profit on a quote is straightforward once you know the two rules behind them: profit is price minus effective cost, and effective cost is the simulation's labor plus material unless a manual override replaces it. The color rule turns that math into a policy the whole shop can see, and the override lets you price real-world extras without hiding them. Put rates on every work center, model material as material, and refresh before you send, and the margin becomes a number you can defend. Walk the full workflow in the EDGEBIC quoting guide, see how the underlying cost is built in pricing a quote from the schedule, and see the platform in full on the EDGEBIC overview.