List every open quotation that uses the material, multiply the quantity used per unit by the price change to get the extra cost per unit, and check each quotation's margin at the price you quoted. Re-price quotations that fall below your minimum margin and are still open, lock the ones you choose to honour, and issue a revision for quotations the customer already has.
Why a small price rise matters more than it looks
Material is often the largest part of a moulded or fabricated product's cost. A price rise passes straight into the unit cost, but the selling price on a quotation stays where it was. The margin takes the whole hit.
A worked example, with sample figures, for a plastic storage crate that uses 2.5 kg of polypropylene (PP) per piece:
| When quoted | After the price rise | |
|---|---|---|
| PP resin price | RM 4.20 / kg | RM 4.85 / kg |
| Material cost per piece (2.5 kg) | RM 10.50 | RM 12.13 |
| Other costs per piece | RM 6.40 | RM 6.40 |
| Unit cost | RM 16.90 | RM 18.53 |
| Quoted price per piece | RM 19.94 | RM 19.94 |
| Margin on cost | 18.0% | 7.6% |
| Profit on 2,000 pieces | RM 6,080 | RM 2,820 |
A 15.5% rise in one material cut the profit on this order by more than half. Nothing on the quotation itself changed, which is why it is easy to miss.
Step 1: Find every quotation that uses the material
This is the hard part with spreadsheets, because each quotation usually has its own copy of the prices. You need a list of quotations that are still open (being prepared, waiting for approval, or sent but not yet confirmed) and that use the material in their bill of materials.
If your costing sheets read prices from one central material list, this becomes a filter instead of a search.
Step 2: Work out the cost change per unit
For each quotation: extra cost per unit = quantity of the material per unit × price change. In the example, 2.5 kg × RM 0.65 = RM 1.63 per piece. Add it to the unit cost, then compare with the selling price in every quantity tier. The lowest tier margin is the one to watch.
Step 3: Decide for each quotation
| Option | What it means | Usually right when |
|---|---|---|
| Re-price | Adopt the new cost; selling prices go up by the same margin | The quotation is still open and the margin would fall below your minimum |
| Lock | Keep the quoted price and accept the lower margin | The impact is small, the customer is strategic, or the quote is close to confirmation |
| Revise | Issue a new version of a quotation the customer already has, with a reason | The quotation was approved and sent, and its terms allow a revision |
Whatever you choose, the decision should be approved by whoever owns pricing, and the reason written down. Six months later, "why did we sell this below our floor?" should have an answer.
Step 4: Stop the next one before it happens
- Put a validity date on every quotation. A 30-day validity limits how long a price is exposed to material movements.
- Set a minimum margin and make tiers below it visible to the person who prices and the person who approves.
- Keep one material price list with history (who changed it, when and why) instead of prices inside each costing file.
- Check the impact before updating a price, so purchasing and sales see the same picture at the same time.
- Keep revisions under the same quotation number so the customer and your team can see what changed.
How Avantix Costing handles this
Avantix Costing is a costing and quotation approval system for manufacturers, made by Avantix Innovation Sdn. Bhd. in Penang. It does steps 1 to 3 inside the system:
- When purchasing enters a new price, a what-if preview shows each affected open quotation's unit cost before and after and its lowest margin at the current selling prices.
- On saving, submitted and pending quotations that use the material are flagged "price changed", and approval requests based on the old cost are withdrawn. Drafts show the new price as a hint in the costing sheet.
- Sales chooses re-price or lock for each flagged quotation; a manager approves it with remarks, and the costing updates automatically.
- Approved quotations are not changed automatically. You create a revision (Rev B, Rev C) under the same number, with a required reason.
See all features or how the flow works.