Cost-to-Selling Price Ratio (RCT): set selling prices from purchase cost

Cost-to-Selling Price Ratio (shown in Versa as RCT) is a way to calculate a selling price from a product’s cost. It answers a simple question: what share of the selling price is cost?

For example, if cost is 69% of the selling price, you know how much to charge above what you paid. Versa can use RCT when pricing products automatically from inventory cost, and it can show Cost and RCT fields on quote, sales order, and invoice line items so your team can adjust prices consistently.

RCT is one of three inventory-cost pricing methods in Versa. The others are Margin and Markup. Your company chooses which method to use. Only one cost-calculation option (Markup, Margin, or RCT) can be shown on each document type at a time.

Who can use RCT?

Company administrators (users with access to Setup and entity settings) configure:

• The company-wide pricing calculation method (Cost-to-Selling Price Ratio, Margin, or Markup).
• Whether Cost and RCT fields appear on quote, sales order, and invoice line items.

Day-to-day users see the Cost and RCT fields on line items when those settings are turned on. If you do not see them, ask your administrator to enable RCT for your entity.

How to turn on Cost-to-Selling Price Ratio

Step 1 — Choose RCT as the pricing calculation method

1. Sign in and select your company (entity).
2. Open Setup → Settings → Price Policies.
3. Find Inventory Costing Pricing Calculating Method.
4. Select Cost-to-Selling Price Ratio.
5. Save your settings.

This controls how Versa calculates selling prices for products that use Inventory Cost pricing.

Step 2 — Show Cost and RCT on document line items (optional)

To show Cost and RCT fields while entering quotes, orders, or invoices, turn on the matching option for each document type. Only one of the three cost-calculation display options can be active per document type.

1. Open Setup → Settings.
2. Go to the section for the document you use:
   • Quotes — enable Show Cost-to-Selling Price Ratio for Price Calculation
   • Sales Orders — enable Show Cost-to-Selling Price Ratio for Price Calculation
   • Invoices — enable Show Cost-to-Selling Price Ratio for Price Calculation
3. Save your settings.

Where you will see RCT in Versa

Product price policies

On a product’s Price Policies tab, when the pricing type is Inventory Cost and your company uses Cost-to-Selling Price Ratio, the policy shows an RCT field instead of a fixed selling price. Enter the ratio as a decimal between 0 and 1 (for example, enter 0.69 for 69%).

Quote, sales order, and invoice line items

When the display setting is enabled, each line item shows:

• Cost — the cost Versa uses for the calculation (from inventory cost or purchase price, depending on your settings).
• RCT — the cost-to-selling ratio.
• Price (unit price) — calculated from cost and RCT, or updated when you change either field.

When you select a product on a line, Versa fills in cost and may calculate RCT from the existing price. Changing Cost or RCT recalculates the selling price automatically.

How Cost-to-Selling Price Ratio works

What RCT means

RCT is the ratio of cost to selling price:

RCT = Cost ÷ Selling price

So if RCT is 0.69 (69%), cost is 69% of the selling price. The remaining 31% is gross profit before other expenses.

How to calculate selling price from purchase price

Rearrange the formula to get the selling price:

Selling price = Cost ÷ RCT

Use the purchase price (or inventory cost) as Cost, and enter RCT as a decimal (not as a whole number percent).

Worked example 1

Given:

• Purchase price (cost): $43.00
• RCT: 0.69 (69%)

Calculation:

• Selling price = $43.00 ÷ 0.69
• Selling price = $62.32 (rounded to two decimal places)

Check: $43.00 ÷ $62.32 = 0.69 ✓

Worked example 2

Given:

• Cost: $10.00
• RCT: 0.80 (80%)

Calculation:

• Selling price = $10.00 ÷ 0.80 = $12.50

Check: $10.00 ÷ $12.50 = 0.80 ✓

Worked example 3 — finding RCT when you know cost and price

If you already have a target selling price and want to know the RCT:

Given:

• Cost: $25.00
• Selling price: $50.00

Calculation:

• RCT = $25.00 ÷ $50.00 = 0.50

Cost is half (50%) of the selling price.

RCT compared with Margin and Markup

Your company uses one inventory-cost calculation method at a time. They are related but not the same:

• Cost-to-Selling Price Ratio (RCT): Selling price = Cost ÷ RCT. RCT is entered as a decimal (0.69 for 69%).
• Margin: Selling price = Cost ÷ (1 − Margin). Margin is also entered as a decimal on price policies (0.35 for 35%).
• Markup: Selling price = Cost × (1 + Markup). Markup is entered as a decimal on price policies (0.35 for 35%).

On quote, order, and invoice line items, Margin and Markup are often entered as whole-number percents (for example, 30 for 30%). RCT is always a decimal ratio (for example, 0.69 for 69%).

Where Versa gets the cost

When Versa calculates price from RCT, the Cost field is based on your company settings:

• By default, Versa uses inventory cost for the product when inventory is available.
• If inventory cost is zero, or if Inventory Costing Pricing Based on Purchase Price is turned on under Price Policies, Versa uses the supplier purchase price instead.
• On invoices, a document multiplier may apply to cost when your setup uses one.

The Inventory Costing Pricing Decimals setting under Price Policies controls how many decimal places Versa uses when rounding calculated prices.

Related features and affected areas

• Product price policies — RCT values on Inventory Cost policies drive automatic pricing for those products.
• Quotes, sales orders, and invoices — optional Cost and RCT fields on line items for manual adjustment.
• Margin and Markup — alternative methods; only one display option (Markup, Margin, or RCT) is active per document type.
• Purchase price vs inventory cost — the cost source affects the selling price even when RCT stays the same.

RCT does not change how taxes, discounts, or currency exchange are calculated on documents. It only affects how the unit selling price is derived from cost.

If you do not see Cost or RCT fields

• Display setting is off — your administrator must enable Show Cost-to-Selling Price Ratio for Price Calculation for quotes, sales orders, or invoices.
• Another method is selected — Markup or Margin display may be enabled instead. Only one of the three can be active per document type.
• Wrong entity — settings are per entity. Confirm you are working in the correct company.
• Price field is read-only — your user role may not allow changing default prices on line items.

Common mistakes

• Entering 69 instead of 0.69 — RCT is a decimal ratio. Enter 0.69 for 69%, not 69. Using 69 would produce a much lower selling price (for example, $43 ÷ 69 = $0.62).
• Confusing RCT with markup — a 69% RCT does not mean “add 69% to cost.” It means cost is 69% of the selling price.
• Expecting margin math — margin uses Cost ÷ (1 − Margin). RCT uses Cost ÷ RCT. The same cost and “percentage” number give different selling prices under each method.

Tips

• Always enter RCT as a decimal between 0 and 1 on price policies (for example, 0.69 for 69%).
• After changing cost or RCT on a line item, confirm the Price field updated before saving the document.
• Use the check formula Cost ÷ Selling price to verify RCT matches your target.
• If prices look too low, confirm RCT was not entered as a whole number (69 instead of 0.69).
• Review Inventory Costing Pricing Based on Purchase Price if selling prices should follow supplier cost rather than average inventory cost.

What this article does not cover

• Detailed accounting treatment of margin or cost of goods sold.
• Customer-specific price lists, quantity breaks, or dimension-based pricing.
• Internal QA or technical implementation details.