This article breaks down how the SetSale pricing engine calculates the final customer price on a quote, from your initial costs to the final number presented to the homeowner. Understanding this logic helps you configure your pricing accurately to ensure profitability on every job.
Part 1: Calculating Your Base Costs
The calculation starts by summing up all the direct costs associated with the job. These are the foundational numbers upon which all markups and profits are built.
Equipment Cost: This is the total sum of what you pay for all physical components. It's calculated as:
Primary Equipment Cost + Additional Equipment Cost + Supplies Cost + Thermostats CostTrue Labor Cost: This is more than just the hourly wage you pay your team. We ask for your True Labor Cost, which should include the base wage plus any additional burdens like benefits, taxes, insurance, etc. A common way to estimate this is to add a 25-30% buffer to the base hourly wage. The total labor cost is calculated as:
Total Install Hours * (Lead Installer Cost per Hour + Helper Cost per Hour)Overhead Cost: This is your cost of doing business. You can set this as either a fixed dollar amount or a percentage. If you choose a percentage, it's calculated on the sum of your equipment and labor costs:
Overhead % * (Total Equipment Cost + Total Labor Cost)
Part 2: Applying Markups
Once the base costs are established, the system applies your markup rules to determine the profit for each part of the job. Our powerful markup engine allows you to create specific rules for different types of equipment, costs, or even names.
The system looks at each line item (equipment, supplies, labor, etc.), finds the first matching markup rule you've created, and applies it. The "Matches" indicator on the pricing page gives you real-time visibility into which rules are being applied to which items, so you don't have to guess.
The sum of the markups from every item creates the Total Markup.
By default, Markups are applied to the sum of Labor and Equipment Costs.
A Special Note on Upgrades
Upgrades are handled differently from all other items. For convenience, we ask you to enter the final customer-facing price for each Upgrade. The system then works backward:
It finds the applicable markup rule for that Upgrade
It reverses the markup calculation to deduce your underlying Cost of Upgrades and the Markup on Upgrades.
This is the only place in the pricing setup where you enter a customer price instead of your cost.
Part 3: Building the Final Customer Price
Here is the step-by-step formula the system uses to build the final price from all the component parts.
Subtotal Before Discounts: All costs and markups are combined.
Total Costs (Equipment + Labor + Overhead) + Total MarkupApply Discounts: Any discounts are applied. The system applies fixed dollar amount discounts before percentage-based discounts to minimize the discount's total value.
Calculate Sales Commission: The commission is calculated on the discounted price.
Discounted Price * Commission %Note: Commission is a cost, but it is not included in overhead calculations and is not marked up.Calculate Subtotal: This is the price before taxes, financing, and rebates.
Discounted Price + Sales CommissionNote: The price of any Upgrades selected by the customer is added at this stage.Apply Rebates: Instant rebates are subtracted from the subtotal.
Add Taxes & Financing: Finally, sales tax and financing fees are added to produce the final number.
Sales Tax is calculated on the post-rebate subtotal.
Financing Fees from the selected plan are added, along with any Credit Card fees identified in the Company Settings.
The final formula looks like this:
Final Customer Price = (Subtotal − Rebates) + Sales Tax + Financing Fees
Part 4: Calculating Net Profit
Your net profit is calculated based on the subtotal, before financing fees and taxes are applied. This gives you a clear picture of the job's core profitability.
Net Profit ($):
Subtotal - (Total Equipment, Labor, Overhead, & Upgrade Costs) - Sales CommissionNet Profit (%):
Net Profit ($) / Subtotal