Understanding the difference between how CoreBridge defines Cost and Price ensures your business will make smart decisions, maintain healthy margins, and remain competitive. It is a foundational concept that is important to understanding Components and the Bill of Materials.
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Cost
In CoreBridge, the Cost represents the amount it costs your business for each product and service. This can include raw materials, as well as labor and overhead. Cost is an internal measurement that is used for budgeting, financial analysis, and profit calculation. Cost can be managed at the Component level, where you are able to outline the cost of each Material, Labor, and Machine so this can be calculated accurately when individual Components are combined into Assemblies.
Managing Cost in Components
Managing Cost in your Components follows the same process regardless of whether you are looking at a Material, Labor, or Machine. In this example, we will be looking at the Cost of a Material.
To begin, navigate to Settings / Components / Materials. Then select the Material you wish to look at.
1. Click on the Material Details tab.
2. Update the Cost as desired.
Note: The system will automatically save your edits and provide you with the details of when the change was made along with the previous amount.
Price
In CoreBridge, the Price represents the amount that will be charged to the customer for products and services. Price is an external facing amount that is driven by market demand, value, and business strategy. Stand alone pricing can be defined for individual products and services, or assembly pricing can be used for the combination of products and services.
For more information on Assembly pricing, please see Pricing Methods, Cost Based Pricing, Market Based Pricing, or Custom Pricing Tables.
Managing Price in Components
Managing Price in your Components follows the same process regardless of whether you are looking at a Material, Labor, or Machine. In this example, we will be looking at the Price of a Material.
To begin, navigate to Settings / Components / Materials. Then select the Material you wish to look at.
1. Click on the Material Details tab.
2. Update the Price as desired.
Note: The system will automatically save your edits and provide you with the details of when the change was made along with the previous amount.
Managing Price in Assemblies
Begin by navigating to Settings / Components / Assemblies and selecting the desired Assembly.
1. Click on the Pricing tab and make the desired changes.
2. Click Save.
Note: For more information on Assembly pricing, please see Pricing Methods, Cost Based Pricing, Market Based Pricing, or Custom Pricing Tables.
Why Understanding Cost and Price Matters
Understanding the difference between Cost and Price is necessary in order to determine your profitability and adjust your pricing accordingly. Profit is determined by subtracting the Cost of an Item from the Price. If you don't understand or know your actual Cost on an item, you can't set a Price that covers the expenses and also includes a healthy margin. This can lead to lost profits due to underpricing, or lost sales due to overpricing.
Cost vs Price on the Bill of Materials
The Bill of Materials is a great reference for finding the Cost as well as the Price on Assemblies and Components. Using and understanding the Bill of Materials can help you make smart and informed pricing decisions. For more information on understanding and accessing the Bill of Materials, please see (insert link here).
a. Cost - This is the amount you pay for an individual Component or Assembly. This number should be smaller than the Price.
b. Price - This is the amount your customer pays you for a Component or Assembly. This number should be larger than the Cost by a comfortable margin in order to maintain profitability.
When the Cost is higher than the Price, your business loses profitability. This pricing structure is not sustainable.
