Poor Pricing Decisions from Unreliable Cost Data

$10,000-$30,000 per quarter in margin leakage (assuming $1.5M-$2.5M quarterly industrial sales at 10-20% margin erosion on 20-30% of orders) • $10,000-25,000 per defense quote (audit risk if allocation wrong); contract non-compliance can trigger price adjustment or contract termination; margin erosion + audit exposure • $12,000-$35,000 per quarter in margin erosion plus compliance/audit risk (defense contracts typically higher margin 20-28%, but erosion of 10-18% = $6,000-$20,000 per contract plus potential DCAA disallowances)

Copy-paste estimates from previous similar-looking quotes; bulk material pricing from 6-month-old supplier contracts; no link to actual cycle time data from electronics assembly line • Email to supplier asking current price; spreadsheet comparing bid price to latest supplier quote; manual negotiation with suppliers to lock in price; quotes submitted with contingency pricing • Excel spreadsheets manually tracking job costs by part type; email chains with machinists asking 'how long did part X actually take'; memory-based tribal knowledge of what jobs typically cost