Costing: user guide

Working out what a job really costs in Sempya CloudERP: landed costs on imports, margin or markup, the minimum-margin floor, and why a quotation is sometimes refused.

How to work out what a job really costs, what price that justifies, and why the system sometimes refuses to let a quotation go out.

This is the user guide for the Costing app in Sempya CloudERP. Inside the system the same guide is at Costing → User Guide, where it also shows your company's current rules. Budgets are covered in the Budgets and spending user guide, and paying for things in the Expense Requests user guide.

Switching costing on

Nothing in this app does anything until someone switches it on. Until then quotations behave exactly as they always have.

To switch on, open Costing → Costing Settings, pick your company, and tick Switched On. Then set:

• Margin floor — the lowest margin a quotation may go out at. Below it, the system refuses.
• Warn below — a softer line. The quotation still goes, but the person is told.
• Override role — who may approve a quotation below the floor. This is required: a floor nobody can override would stop your sales team the first time a genuine deal is thin.
• Show supplier cost to all sales staff — off by default. Ordinary sales staff then see the price the sheet produces, not what you paid for the goods.

Switch it on when your team has been told. Once it is on, every quotation needs a cost sheet before it can be submitted.

The idea in one paragraph

A cost sheet sits behind a quotation. It works out what each item costs you — the supplier price, plus the cost of getting it here — and then applies your margin to reach a selling price. The margin is checked against your company's floor before the quotation can go to the customer. So the price is never a guess, and a bad one cannot go out quietly.

Two ways to start

Start from the cost sheet (usual for imports). You cannot know the price until you know the landed cost, so build the sheet first:

1. Costing → Quote Costing → New
2. Choose the customer and add the items with quantities
3. Enter or check the costs, set the margin
4. Press Create Quotation

The quotation comes out with exactly the rates the sheet calculated.

Start from the quotation (usual for local stock you know well). Open the quotation and press Cost This Quotation. The sheet takes its lines from the quotation; press the button again after changing the quotation and the sheet follows, keeping any costs you already typed.

Where the cost comes from

For each line the system looks, in this order, and tells you which one it used:

1. Last purchase — what you last paid for that item
2. Buying price list — a price you have recorded for buying
3. Stock valuation — the average value of what is on hand
4. Entered by hand — with a note saying where the figure came from

A cost with no note is not accepted when you type it in yourself. In six months' time nobody will remember whether 1,200 was a supplier's email or a guess.

The sheet also shows how old the cost is. Anything older than your staleness setting (90 days by default) is flagged. An old cost is not wrong, but it is worth a second look before you commit to a price on the strength of it.

If no cost is known at all, the line cannot be priced and the quotation cannot be submitted. That is deliberate: a line costed at zero prices at pure profit and nobody notices until the invoice.

Landed cost: what it really costs to get here

For imports, the supplier's price is only part of it. A Landed Cost Template holds the usual additions as percentages, so you do not retype them:

Pick a template on the line, or let the costing rule choose one. The percentages are a starting point — change them when you know the real figures for a particular shipment.

Buying in another currency? Set the exchange rate on the sheet and an exchange rate buffer — a small cushion, 3% by default, against the rate moving between quoting the customer and paying the supplier. The buffer only applies to foreign purchases; it is never added to a kwacha cost.

Margin or markup — and why people confuse them

Both are offered on every line, and both are always shown, because they are not the same number:

• Margin is a share of the selling price. Price = cost ÷ (1 − margin)
• Markup is added to the cost. Price = cost × (1 + markup)

A 25% margin is a 33.3% markup. Quoting 25% markup when you meant 25% margin gives away 5% of the price. The sheet shows both on every line so the mistake cannot hide.

Use whichever your trade uses. A costing rule can set the default per source (local purchase, import, service) and per item group, so most lines are already right.

What the checks mean

Below the floor. The margin is under your company's floor. The quotation can only be submitted by someone holding the override role, and they must write a reason. The reason stays on the sheet.

Under the warning level. It goes through, but the person is told what margin they are quoting at.

An impossible margin. This blocks everyone, override role included, because it is not a commercial decision — it means the data is wrong. Usually a missing cost, or a quantity in one unit priced against a cost in another: a box costed as a single piece. Fix the cost sheet, do not approve around it.

Careful with discounts. A discount comes off after the margin is worked out, and it eats margin faster than people expect. 10% off a 25% margin leaves 16.7%, not 15%. The floor is checked again after the discount, which is usually where it bites.

After the sale

When the invoice is raised, the system records what the sale actually earned against what the sheet quoted. That comparison is the honest test of your costing: if quoted margins are consistently better than realised ones, the costs going into the sheet are too low, and the fix is upstream — better purchase records, not a bigger margin.

Questions people ask

Does this change my prices automatically? No. It calculates a price and puts it on the quotation when you create it. You can still change the quotation.

Can I quote below cost if I need to? Yes, if you hold the override role and write a reason. Sometimes you take a loss to win an account, and the system records that you decided to, rather than hiding it.

Why can't I see the supplier cost? Because your company has chosen not to show it to all sales staff. You see the price the sheet produces. Ask whoever holds Costing Manager if you need the cost itself.

Do I have to use it for everything? Every quotation needs a sheet once the app is on. For simple local stock the sheet takes seconds: the cost is already known, the rule supplies the margin, and you press one button.