What Is Margin Percent on a Quote?

Margin percent on a quote is profit divided by the quoted total price, multiplied by 100, where profit is the quoted total price minus the effective total cost. In EDGEBIC by User Solutions that cost is built from labor and material only, labor being each work center's simulated hours at its rate and material coming from material routing steps or the product's unit cost, which makes the quoted margin a contribution figure rather than a fully absorbed one and worth reading with that boundary in mind.

This entry is part of the EDGEBIC glossary series; for the broader vocabulary of production planning, see the manufacturing glossary.

How Margin Percent Works

Three numbers stack up, and each is computed rather than typed.

Estimated cost comes out of the simulation. When a quote is simulated, the real scheduling engine plans a temporary job for the quoted product and quantity, and the hours it actually allocates on each work center are priced at that work center's rate. A per-step labor rate on the routing wins over the work-center rate where one is set. Material is taken from material-type routing steps, or falls back to the product's unit cost multiplied by the quantity. If the product's routing references a sub-assembly, that sub-assembly's own routing hours and labor cost are rolled in recursively, through any depth, respecting the per-step quantity multiplier.

Profit is the quoted total price minus that effective total cost. The word effective matters: if a manual cost override has been entered, profit computes from the override while the calculated labor and material split is retained for later variance reporting.

Margin percent is profit divided by the total price, times 100.

The grid colors the result: green above 20 percent, amber above 10 percent, and red when negative. Those thresholds are a fast visual read rather than a business rule, and a plant whose overhead structure demands more should treat green as a floor rather than a target.

A Worked Example

From the documentation's sample quote, QUO-2026-011 for 200 of Widget-A.

After the simulation runs, the row fills in: start July 20, end August 14, estimated hours 151.50, estimated cost $9,230.00, profit $7,770.00, margin 45.7 percent shown in green. The sales price behind that is $17,000.00, and the detail window's cost and profit analysis block shows the same numbers with a lead time of 25 days.

Check the arithmetic. Price $17,000 minus cost $9,230 gives profit $7,770. Divide $7,770 by $17,000 and you get 0.457, so 45.7 percent margin.

Now contrast that with markup on the same job. If the quote had been priced by markup instead, the unit price would have been derived as effective cost times one plus the markup percent, divided by quantity. To reach $17,000 from $9,230 requires a markup of about 84 percent. The same job is a 45.7 percent margin and an 84 percent markup, which is exactly why a target stated as a bare number is dangerous unless everybody knows which of the two it refers to. See markup percent in quote pricing for the other side of the pair.

How EDGEBIC Uses Margin Percent

The figure appears in three places and behaves consistently in all of them:

• On the quote grid, as the Margin percent column beside Est. Cost and Profit, colored by the thresholds above.
• In the quote dialog's cost analysis panel, filled from routing math before any simulation runs. That is a quick sanity check; the simulation replaces it with capacity-aware numbers.
• In the simulation results window, as Profit Margin inside the cost and profit analysis block.

A handful of behaviors are worth knowing:

• Costs are a point-in-time snapshot. If work-center rates or capacity change afterward, a banner appears telling you to refresh and re-simulate before sending the quote.
• A typed price is never overwritten. If unit price was zero when you simulated, it is auto-filled from cost and markup; once you type your own, later simulations leave it alone.
• A manual cost override changes the basis. Enter one for something the system cannot know, such as tooling wear or a scrap allowance, and profit and margin compute from it while the calculated split is kept for variance work.
• A zero rate silently prices a step at nothing. A work center with no hourly rate contributes no labor cost, which inflates margin without any warning. Rates are a prerequisite for meaningful quoting.
• The figures carry through on conversion. When a quote becomes an order, the estimated cost, labor and material split, hours, markup, and unit price are all kept, which is what makes quote-versus-actual variance reporting possible later.

The honest framing to hold internally is that this is a contribution margin on labor and material. It is the right number for comparing one quote against another and for setting a floor below which work is not worth taking. It is not the number your accountants will produce at year end, because the overhead layer sits outside it. See the labor and material cost basis on a quote for the boundary in detail, and reading quote margin and profit for the screens.