Markups & Allowances Tab
Markups & Allowances Tab
If your firm develops budgets, estimates, proposals, or does procurement services, then the information on the Margins & Allowances Tab is important and needs to be configured correctly when setting up a project.
Markups & Allowances for Sub-Charges
Sub-Charges are set up in the System Settings. When a project is created, the default markups and allowances for the sub-charges will appear in the layout below.
You can modify these amounts as necessary for a particular project.
Definitions
| Allowance |
This is a term used in DesignSmart to indicate the percent or amount that will be allocated for a sub-charge. In the screenshot above there are four sub-charges defined:
You can define different sub-charges for your firm. Click here for more information. In the screenshot above the sub-charge Freight has been assigned a freight allowance of 10%. So if an item costs $100, a freight allowance of $10 ($100 x 10%) will be added to the price of the item. |
| Markup | This refers to the percentage, or amount, that an item, service, or sub-charge is increased for profit. |
Setting the Known Amount
It is not necessary to enter the Known Amount if you do not know it. However, it is imperative to set the Markup and Allowance percentages before creating any budgets or proposals if the project will include these amounts.
If you know the Contract Amount for the project:
- In the field next to Which is the known amount, click on Contract Amount
- In the field next to the Enter the known Contract Amount here, enter the Contract Amount.
An example of how this would come into use is if a client stated at the outset of a project that they had $125,000.00 to spend on this project.
By filling in this section, you would be able to determine how much of the contract amount would be spent on merchandise, sub-charges, design fees, and taxes.
If you know the Merchandise Amount for a project, you can determine what the contract amount will be. To do this follow these steps:
- In the field next to Which is the known amount, click on Merchandise Amount
- In the field next to Enter the known Merchandise Amount here, enter the Merchandise Amount
Project Totals
As stated above, it is not necessary to enter a Known Amount, but if you do, then the block below Known Amounts will indicate the Total Project Costs and Total Markup Amounts, as well as the Margin and Markup percentages.
Working with Markups
When you create a new project, the default markups from the System Settings will appear in your new project. For example, in the screenshot below the merchandise markup of 30% comes from the default markup setup in System Preferences. Click here for more information.
You can change the default markup for merchandise for this project on this screen.
Every time you add an item, the item will be assigned the markups shown in this block.
You can change the markup for all items (that are not on approved proposals) by changing the markups here.
When you change the Markup or Allowance percentage, the system will ask you if you want to update all the items in that project to that percentage. If you respond Yes, all items will be updated to that percentage except items on an approved proposal and those that have already been ordered, or invoiced.
Working with Allowances
Just like Markups, when you create a new project the default Allowances set up in System Settings will appear on this tab. Just like Markups, you can change the allowance percentages for this project. Remember: changing the percentages here, does not change the default settings back in System Settings.
Every time you add an item, the item will be assigned the allowances shown above.
You can change the allowance for all items (that are not on approved proposals) by changing the percentages in the screenshot above.
When you change the Markup or Allowance percentage, the system will ask if you want to update all the items in that project to that percentage. If you respond Yes, all items will be updated to that percentage except items on an approved proposal and those that have been ordered or invoiced.
Allowances and Markups on Items Detail View
It is important to understand where the Markups and Allowances appear on the Item Detail View. The image on the left is the Item Detail View for a bookcase. The freight allowance is set to 10%. This comes from the Markups & Allowances Tab. 
The image on the right shows the freight allowance for this project is set to 10%.
Even though the Markups and Allowances are set at the project level, the user can change them as required at the item level on the Item Detail View.
"Holding" Markups and Allowances
Sometimes you might want to set a specific amount and let DesignSmart calculate the corresponding percentage.
For example, for this project, the warehouse quoted $10,000 for storing the items before installation. So you would click the padlock icon next to the amount field and enter $10,000.00. DesignSmart will calculate the corresponding percent.
The advantage of holding an amount is that if other markups, allowances, or amounts are modified, those percentages or amounts set to Hold will remain constant and will not change.
Working with Allowances
How allowances are used in DesignSmart will depend on your firm's workflow. We'll explain allowances using the most common sub-charge - freight.
| No, we don't | Then your firm probably provides an overall estimate for freight, but bills the client for actual freight. This is the most common practice we see with our commercial clients. In this case, you would not enter freight charges at the item level. |
| Yes, we do | This is a fairly common practice with residential firms. In this case, you'll need to have your project manager turn on a configuration setting that will show the freight allowance on the Pricing Tab of Item Detail View. (Please refer to the section Configuration Settings for more information on configuration settings). |
The red arrows on the Pricing tab on the left show the allowance percent fields for sub-charges. These appear when the allowance fields have been turned on.
The allowance percent is applied to the Extended Cost of the item. In the example above, the cost of the item is $3,449. The quantity is 1. The extended cost is $3,449 x 1 = $3,449. The freight cost is then equal to $3,449 x 0.15 = $517.35.