Table of Contents
Purpose 🧠
Now that you have reviewed how pricing markups work and how they also depend on a hierarchy, we can use the Pricing Markup Calculator to calculate what markups should be before putting them in Aspire. 💥
If your company is new to Aspire, you might need some help in transforming your gross margins to the markups that Aspire will use to price your services.
We've got you taken care of!
In this article, you’ll understand how the Pricing Markup Calculator can support you in entering markups in Aspire. The purpose of the markup calculator is to figure out pricing for a single service line specific to a branch, division, or service type.
The Pricing Markup Calculator will help you:
Help convert your gross margins or previous pricing for each item type into markups.
Test service level pricing based on these new markups.
Keep a record of the markups you have tested and want to put into Aspire.
Pricing Markup Calculator Spreadsheet
Below, download the Pricing Markup Calculator spreadsheet as well as read the instructions in the next section. 👇
To Download:
If using Excel,
Click the button below to download a copy of the Pricing Markup Calculator.
Select File ▶️ Download ▶️ Excel. Make sure to Save when filling out and when finished.
If using Google Sheets,
Click the button below to make a copy of the Pricing Markup Calculator.
You will be prompted to sign in to your Google account.
Once you are signed in, you will be prompted to Copy Document. Select Make a Copy and the Pricing Markup Calculator will open in Google Sheets.
Edit as needed.
Understanding the Pricing Markup Calculator
You can use the pricing markup calculator for the 5 individual item types in Aspire! This means that you should use this calculator and its tabs for each item type as you define your markups.
As you work your way through the calculator, you’ll see that there are multiple tabs across the bottom of the spreadsheet:
The first 5 tabs are for each item type and their matching markup calculator.
Calculator Type | Definition |
Labor Markup Calculator | Use this tab to calculate the labor item type specific markup specific to the division or service type you are creating pricing for. |
Material Markup Calculator | Use this tab to calculate the material item type specific markup specific to the division or service type you are creating pricing for. |
Equipment Markup Calculator | Use this tab to calculate the equipment item type specific markup specific to the division or service type you are creating pricing for. |
Sub Markup Calculator | Use this tab to calculate the sub item type specific markup specific to the division or service type you are creating pricing for. |
Other Markup Calculator | Use this tab to calculate the other item type specific markup specific to the division or service type you are creating pricing for. |
💡Tip: As you’re working through each tab, only use the item types that would create the service you want to test. Clear out all of the green fields in the item calculators you do not use. This will bring these values to zero.
The last two tabs on this spreadsheet are the Pricing Test Scenario and the Pricing Markups Worksheet.
Tabs in Markup Calculator Spreadsheet | Definition |
Pricing Test Scenario | The Pricing Test Scenario will show what your pricing should look like on an estimate before you enter pricing markups in Aspire. |
Pricing Markups Worksheet | The Pricing Markups Worksheet helps you keep a record of historical markups from your Aspire system. |
The first tab of the calculator is shown below and displays the calculator for the Labor Item Pricing Markup Calculator:
The purpose of the markup calculator is to figure out pricing for a service line specific to a branch, division, or service type.
📌Note: Enter in values only for the item types that would apply! As you work through the calculator spreadsheet and its tabs, clear out values for item types that would not apply.
🧠 The values entered in each tab are automatically entered into the Pricing Test Scenario tab. This means you can test a service’s pricing without having to create a test estimate in Aspire for your markups!
In the next section, you’ll decide how your item-specific gross margins will transform into item-specific markups. We will break down each section of how to complete the calculator fields in order to view your prices in the Pricing Markups Worksheet! We will use the Labor Item Pricing Markup Calculator as our example.
Labor Item Pricing Markup Calculator
Since most pricing includes pricing markups for your labor costs, we’ll start first with the Labor Item Pricing Markup Calculator! Choose your Branch and Division, along with your Service Type if applicable. The branch, division, and service type values will appear on all other tabs to help you remember the correct pricing hierarchy. If a value doesn’t apply, you can make it blank.
Finding Your Labor Price Per Hour
Next, you’ll fill out the green fields for your Labor Markup percentage to find your Labor Price Per Hour.
Enter your Average Labor Cost per Hour and your Desired Gross Margin Percentage. The average labor cost is your average wage rate specific to the branch, division, or service type you entered in the above section.
Since average wage rates can vary based on the service being performed, it’s important to calculate this correctly.
Finding Labor Markup Percentage Based on Desired Gross Margin %
The Average Labor Cost and the Labor Price Per Hour fields displayed in the previous section automatically get added to this section.
📌Note: The Labor Price Per Hour in this section is rounded up to the nearest dollar. This is why your calculated gross margin will show slightly different than your desired gross margin.
The green field to be entered here can either be left as 0%, if you are only focusing on Gross Margin percentages. If you are looking to set a Net Profit Goal, enter your percentage.
If you are new to Aspire, and usually factor net profit into your overhead, continue to leave this blank until your company’s next pricing review.
After you’ve entered your Divisional Net Profit goal, your Labor Type Markup percentage is displayed! This field will be automatically added to the Pricing Test Scenario and Pricing Markups Worksheet tabs.
Here’s what it looks like on the Pricing Test Scenario:
Here is what it looks like when it is pulled onto the Pricing Markups Worksheet:
As you enter the green boxes with values, you will see that the Calculated Gross Margin box will populate with a percentage:
As outlined in the box, the Gross Margin % is for the item type only and not for the entire service or estimate! This box is used to double check that your desired gross margin is within your desired guidelines.
If You're Not Using Gross Margins
If you don’t use Gross Margins to build pricing for your estimates, you can hide these sections in your Google Sheets. This will help you make your sheet show only the information you want, making it easier to see what you’re focusing on.
First, you need to download a copy of the calculator that you can change.
📌 Note: If you don’t know how to download it, check the Pricing Markup Calculator Spreadsheet section above.
Once you have your own copy of the calculator, find the section you want to hide. For example, if you don’t need the Finding Your Labor Price Per Hour section, highlight those rows.
After highlighting the rows you want to hide, right-click and select the Hide Rows option.
Now that the Finding Your Labor Price Per Hour section is hidden, you can manually overwrite what is entered into the Average Labor Cost and the Price Per Hour cells.
📌Note: Keep in mind that overriding the cells will not affect the text listed on the left side of the section.
Now the rows are hidden and the formulas are overridden, you can focus on the results you want to see!
Material, Equipment, Sub, and Other Item Tabs
For Material, Equipment, Sub, and Other calculations, you’ll add values into the green Cost and Desired Gross Margin cells to get your Per Unit Cost.
For Material items, Per Unit Cost could be in gallons, pounds or bags.
For Equipment items, Per Unit Cost could be in days, or hours.
For Sub items, Per Unit Cost could be in hours, dollars, or days.
For Other items, Per Unit Cost could be in ounces, cubic yards, or dollars.
💡Remember: As you’re working through each tab, only use the item types that would create the service you want to test. Clear out all of the green fields in the item calculators you would not use. This will bring these values to zero.
How to Hide the Item Type Tabs You Don’t Need
If there’s an item markup tab you don’t need in the Pricing Markup Calculator, you can hide it, just like how you did in the If You’re Not Using Gross Margins section.
First, find the item markup tab you don’t need at the bottom of the screen.
Next, right-click on that tab and choose Hide Sheet. This will hide the tab from view!
Using the Pricing Test Scenario
The Pricing Test Scenario will give you an idea of what your pricing should look like on an estimate for a single service before you build one in Aspire.
Service Pricing Hierarchy
These fields’ values come from what was entered in on the Labor Item Pricing Markup Calculator. Again, this will help you identify what pricing line this will be specific to. Remember, the more specific your pricing line, the higher in the pricing hierarchy it will be.
Test Estimate for a Single Service
After you have entered in the information for each needed item type, as well as cleared out fields for the unneeded item types, You can use the Pricing Test Scenario for an Estimate tab to test your pricing in Aspire before entering it.
This is extremely helpful so that you will not have to enter test estimates as you are experimenting with your markups for your Labor and Materials in Aspire.
🧠 Reminder: Your Markup % values are automatically added to this section from the previous Markup Calculator Tabs!
Enter in specific quantities for each item type you would like to test. Set quantities to zero if you are not bidding these for this service.
Total Cost
The Total Cost on the Test Estimate comes from the average item cost per unit (or hour) multiplied by the quantities entered into the green cells.
Total Markup Dollars
Your Total Markup Dollars are calculated from the Markup Percentages that were added from your item calculator pages. Total Markup Dollars is also known as your Total Overhead Recovery.
Total Price
Total Price is your total cost plus total markup dollars with desired net profit applied.
When the net profit is 0%, your Break Even total and Total Price will be the same. The total price is the total cost plus the Total Markup Dollars.
Gross Margin and Gross Margin Percentage
The Gross Margin and Gross Margin Percentage on your Pricing Scenario are displayed at the bottom.
Review the gross margin percentage. As you enter in different quantities, you’ll notice that the calculated gross margin will change depending on the markup percentage.
For example:
If you increase the quantity of your labor item, and it’s a higher markup percentage value than the total gross margin, your total gross margin % will increase.
If you increase the quantity of your material item, and it’s a lower markup percentage value than the total gross margin, your total gross margin % will decrease.
If your blended gross margin and pricing markups are acceptable, you can now enter these into your Pricing Markups Worksheet.
Pricing Markups Worksheet
Once you have confirmed your Gross Margin and Gross Margin %, and you’ve tested them in the Pricing Test Scenario, you can enter them on the Pricing Markups Worksheet.
The pricing hierarchy and item type markups you used to test will be shown. Enter them into the first available row.
Start the process again for the next service you would like to test!
Since this file can be used repeatedly, you can make a change in this sheet any time a markup adjustment is needed.
For instance:
You can create a new one each year as part of your pricing review.
The other reason why this calculator is helpful is to help you create history on markups and pricing models before you move items or services into Aspire.
💡Tip: Create a new tab on your calculator spreadsheet to keep a historical record of your Pricing Markups. A common name for this tab could look like: 03/04/02024 Pricing Worksheet.
Once your numbers have been added to the Pricing Markups Worksheet, you can head to Aspire and enter them into the Pricing Markups section in Administration!
To learn how to enter your pricing hierarchy and markup percentages, go to our next article, Entering Pricing Markups in Aspire!
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