10 tips for the optimal cost calculation tool
We let you know what is important
Calculating product and production costs poses a challenge for many buyers every day: How do I calculate correctly? Which current market prices need to be considered? Are there alternative manufacturing possibilities? If a plausible answer can be found to all these questions, overall savings of around 10 to 40 percent can be achieved on average. Product cost calculation tools should help with the cost analysis and the realization of saving potentials. But with so many providers, it’s hard to find the right software. We’ll tell you what’s important when it comes to the decision.
1. Fast amortization
One of the main reasons for the purchase of a calculation software in most companies is probably the gained transparency about costs. This goal also usually includes the second step, the desire to save costs. Nevertheless, the introduction of a new tool in the company by an external provider is initially associated with costs. Depending on the license model, the purchase can quickly be in the five-digit range. This makes it even more important that the software pays for itself quickly. But one can regard “quickly” as a very flexible term. As a rough guideline, the software pays for itself quickly if the users already realize 50 percent of the cost savings in a training course lasting about five working days. This may sound like a sporting goal, but it is quite feasible.
You probably know it: A new tool is being introduced in the company for a lot of money, which is to be used by employees with immediate effect. And as so often in life, it is the first impression that counts and for which there is seldom a second chance – keyword: usability. Product costing tool providers often offer trial versions so that you can get a first impression of usability. In addition to design aspects such as font size, font (fonts without serifs are usually easier to read), colored markings and highlighting, you should also pay attention to the clarity of the tool. For example, if there is a kind of “start page” that summarizes the most important information, if there are different tabs that lead through the tool with symbols and clear descriptions, if results are displayed clearly, for example with the help of diagrams and so on. It is important to evaluate the tool objectively and to leave out personal opinions about design, choice of color or other things.
3. Intuitive operability
Many applications we use every day live from their intuitive operability, because who has the time and inclination to learn the ropes of a tool for days? The criteria of usability and intuitive operability are closely linked – however, in the last case, the fast and short training time is even more important. Ideally, it does not take weeks of training to use an application. While this may be realistic for many B2C products, it is often not that easy in the B2B sector. The reason is simple: The problems that B2B products solve are much more complicated. This is not different when calculating product and production costs. Nevertheless, when selecting the right software, it is important to ensure that it is easy for users to get familiar with it quickly and thus to be intuitive to use. As in the first point, “quickly” is a very subjective term. As a general rule, software that can be used in its main features by you within half an hour meets the criterion.
4. Low maintenance costs
Many companies only see the one-time acquisition costs when purchasing the software. Therefore, you should always check in advance whether maintenance costs may appear. You should also consider waiting time as a “cost”, because time is money. As an example: You use the software after a long break and it has to install updates for several minutes. One advantage here are online versions, which are automatically always up to date and updates are therefore no longer necessary. Even minor errors should be corrected quickly.
5. Complete data
Data is the gold of the 21st century. Behind the cost calculation programs rest huge databases on which the calculation is based. The data is therefore a sort of heart of the software. For this reason, you should check them thoroughly. First, the data of the software should be complete. What does a software serves that does not contain the currency of your production country or your machine type? Whether the data for your company is complete can be very subjective. It is therefore essential to look around for test versions in which you can get a first impression of whether the tool is suitable for you.
6. Flexible data
In addition to completeness, flexibility also plays a major role. Every company, every production, every product is different. Realistic calculations depend on the accuracy of the data and nobody knows them better than you! Tools in which you have the option of manually adjusting or entering data can therefore offer added value. Above all, internal company factors, such as the hourly rate, should be entered flexibly and can also be changed subsequently.
7. Current data
The third point on the subject of data is topicality. You only get a realistic cost calculation if the data is up-to-date. Here you benefit from online versions that are always up to date and contain the latest data (see point 4), because the amount of data is growing rapidly and is constantly changing. If you’re busy updating most of your work yourself, you’re wasting time and money – and that’s exactly the point where the software is supposed to help in saving.
8. Networking capability
Our work routine today is shaped by globalization and digitization. For a long time, companies have stopped working in one location, but all over the world. A cost calculation program that is to be established in the company must also fulfill this requirement of our age – keyword network capability. Especially online versions of the product cost calculation programs offer a decisive advantage here. Frequently, several users can operate in the program at the same time and carry out calculations or work on the same calculation. The number of users in “package models” is often limited. It should be considered in advance whether a full license or a monthly license is cheaper.
9. Alternative production possibilities
“Would have, if and when…” – We have to make decisions every day. Which one is the right one often only becomes clear at a later point in time. Especially in the production industry, decisions must be made carefully, as the risk of economic damage can quickly become expensive. Some few cost calculation software also show real alternative production possibilities. The risk of making a wrong decision during production is thus significantly minimized and offers companies genuine monetary added value. It is therefore also worth comparing the different offers here.
10. Professional Service & Support
The software has been purchased, the employees have been trained, first Euros have been saved: The start has been made. Nevertheless, questions or technical problems may arise when using the calculation software. When investing in high-quality software, you can also expect professional service and support. Professional providers give their customers a contact person who can be contacted by phone, e-mail or even personally in case of questions and problems. You should attach importance to the know-how and expertise of your contact person.
The topic of costs is still a hot topic in companies. Cost calculation tools can create more transparency, dig up real savings and contribute to the marketability and competitiveness of your company. In order for the investment to be worthwhile, however, the points above must be carefully considered and discussed within the company. Once you have found your optimal calculation software, you already hold real savings treasures in your hand.