Am I selling a product at a loss without knowing it?

2026-11-06 | Intagya ERP

A steel works sells three products: square tube, galvanised pipe and angle bar. Angle bar sells well, customers always ask for it, and the salesperson loves it.

In our sample data, angle bar sold at an average of 8,120 a unit, and its real cost was 8,396. Every order of it lost money. Nobody noticed, because the figure everyone looked at was the price of steel.

Why don't ordinary reports show the loss?

Because ordinary reports compare the selling price with the cost recorded on the product, which is often an old figure or materials alone. Wages, machine depreciation, power and rent are all posted as general expenses. The year's profit comes in lower than you expected, and you cannot tell which product caused it.

A loss spread over every product is invisible. A loss pinned to one product is something you can fix.

What belongs in the real cost of a manufacturing order?

• Materials as actually issued from stock, not as planned.
• The work of each line or machine: its actual hours at an hour rate built from salaries, depreciation, running costs and a share of factory overheads.
• The scrap recorded on the order.
• Freight and customs paid on the materials, because they are part of what the material cost.

Delivery and installation for the customer do not belong on the product. They are a cost of that order, and they go on the sales order.

How do I see the profit of each manufacturing order in Intagya ERP?

Open any finished manufacturing order and go to the Real cost tab. At the top are materials at the value issued from stock, line work with its hours, scrap, then the real cost and the cost per unit. Below are the selling value, the profit and its share of the selling value.

The selling value comes from the sales order line the order was made for. When it was made for stock, the system uses the product's average selling price over the last three months. The table under the cards tells you which line took the biggest part of the work cost.

How do I find the loss-making products without opening every order?

Use the Product profitability report in the Costs menu inside Manufacturing. For each product it shows the number of orders, the quantity produced, the real unit cost, the average selling price and the profit rate. The Losses first filter puts products sold below their cost at the top, in red.

The Order costs report shows the same per order, with an Estimate column on orders whose month is not closed yet. Do not make a big decision on one estimated figure. Wait for the close, or look across several months.

Where can I see the whole picture on one screen?

In the Manufacturing overview, Costs tab. It shows this month's production cost split into materials, salaries, depreciation, running costs and factory overheads, a sold-at-a-loss card with the product names, a dearest-hour card to see where running costs go, and the month close card with the last closed month.

I found a product that loses money. What now?

Do not raise the price straight away. First ask where the cost comes from. If materials are the biggest part, look for another supplier or cut scrap. If it is line work, look at the dearest line; the product might be made on a cheaper one.

If nothing works, raise the price or stop selling it on its own. Some loss-making products deserve to stay because they bring customers who buy other things. That is a fair business decision, as long as you make it knowing the number.

The figures are only as good as the hour rates and factory overheads behind them. Set those up first, then trust the red in the report.

How do I work out a machine's hour rate from salaries, depreciation and power?

How do I spread factory overheads like rent, water and supervision over my products?

Today, open Product profitability and choose Losses first. If there is no red, good news. If there is, you have found the most important job of the week. The steps, with pictures, are in the user guide.

Real production cost, step by step