Measure material exposure before choosing a response
For a committed fixed-price case, hold the accepted price constant and replace only the supported material input. Record quantity, unit cost, evidence date, currency and indirect-tax basis before interpreting the result.
| Case | Materials | Contribution | Margin |
|---|---|---|---|
| Quote baseline | 4,000 CU | 20,000 − 9,600 labour − 4,000 materials − 2,000 other = 4,400 CU | 22% |
| Material downside | 5,000 CU | 20,000 − 9,600 − 5,000 − 2,000 = 3,400 CU | 17% |
Establish what changed
Before comparing responses
- Use the current estimate and actual records on the same period and cost basis. (not complete)
- Separate labour hours from labour cost per hour. (not complete)
- Separate quantity changes from supplier-price changes. (not complete)
- Identify whether the change is recurring, temporary or job-specific. (not complete)
- Reconcile scope changes and rework before calling the difference inflation. (not complete)
- Record customer commitments and capacity constraints that limit the response. (not complete)
Re-cost, reconcile and test scenarios
- Rebuild the current job or service cost from the latest records.
- Reconcile the new cost with the previous estimate by component.
- Calculate the margin under the current price and scope.
- Model a re-price scenario without assuming demand is unchanged.
- Model a re-scope scenario with explicit deliverable or service-level changes.
- Model a process scenario with its implementation cost and capacity effect.
- Choose a review trigger and compare actual delivery after the change.
Scenario margin = (scenario price − scenario cost) ÷ scenario price × 100
- Scenario price
- Customer price entered for one response scenario (currency) — labelled user assumption
- Scenario cost
- Reconciled cost expected under the same scope and period (currency) — business records and labelled assumptions
- Scenario margin
- Price-based margin under the entered scenario (percentage) — calculated scenario
Worked scenario comparison
The numbers are user-labelled assumptions in generic currency units and do not describe a market or recommended response.
| Scenario | Price | Cost | Calculated margin | Decision boundary |
|---|---|---|---|---|
| Current price after cost rise | 1,000 | 800 | 20% | May no longer meet the entered margin goal |
| Re-price assumption | 1,100 | 800 | 27.3% | Demand and commitments remain unproven |
| Re-scope assumption | 1,000 | 700 | 30% | Customer value and scope acceptance must be checked |
| Process-change assumption | 1,000 | 740 | 26% | Implementation cost and delivery reliability are excluded here |
Match the response to the supported cause
| Supported finding | First response to test | Do not skip |
|---|---|---|
| Recurring input-cost increase | Re-cost and test price or supplier choices | Demand and service quality |
| Repeated scope additions | Tighten scope and change control | Customer communication and approval |
| Delivery-hour overrun | Review estimate, rework and process | Capacity and quality effects |
| Lower billable capacity | Review utilisation and service mix | Non-billable obligations and demand |
Related tools
- Job Costing & Margin Planner
Compare quoted and actual job economics and identify overruns
- Price Increase Profit Impact Planner
Test a price increase
- Service Rate & Quote Planner
Set a viable rate and project quote
Frequently asked questions
- Should every cost increase be passed through at the same percentage?
- No. Identify the affected cost, its share of the service, whether it is recurring and the customer and capacity implications. A blanket percentage can over- or under-state the required change.
- Can the price of already agreed work always be changed?
- Do not assume so. Review the actual agreement and obtain appropriate advice where needed. This guide does not interpret contractual rights.
- Should one overrun reset every future quote?
- Not without investigating the cause. Separate a one-off event from a repeatable change, then update only the assumptions supported by records.
Calculation methods used in this guide
- Job Costing & Margin Planner methodology — Margin101: Estimate-to-actual cost and margin reconciliation.
- Price Increase Profit Impact methodology — Margin101: Price, contribution and volume scenario boundaries.
- Service Rate & Quote Planner methodology — Margin101: Recovery-rate scenario inputs and limitations.