GlossaryKind of term: Cost and economicsHit rate
What is hit rate?
Hit rate is the share of the quotes you send that turn into orders, counted by number or by value, per period, customer or kind of work.
Hit rate is the ratio of orders won to quotes sent. It can be counted by number of quotes or by quoted value, and the two can differ widely: winning many small quotes and losing the large ones gives a high hit rate by number and a low one by value. Quotes still awaiting a decision are usually not counted as lost until their validity expires. Because an order can arrive weeks after the quote, it is best calculated per group of quotes from the same period, not against whatever orders happened to arrive in that period.
How does hit rate work in practice?
The total says little; the differences between customers and kinds of work say more. A regular customer placing repeat orders scores differently from a buyer who sends a drawing to many suppliers to test the market. Those differences let you decide per request how much estimating time to give it: a full estimate with route and setups, a budgetary price or a decision not to quote. Quoting work that does not lead to an order is a cost; if it sits in your overhead, the orders you win carry it through rate or mark-up. Look at hit rate together with margin: high with a low margin may point to pricing too sharply, low with a high margin to pricing above the market, though lead time, your standing with the customer and the competition play a part too.
What is hit rate often confused with?
Hit rate and win probability are sometimes used interchangeably, but they are not the same: hit rate measures afterwards what share of your quotes was won, win probability is your estimate beforehand for one quote. Margin is separate again: margin is what you earn on a won order, hit rate how often you win.
Frequently asked questions
How do I measure hit rate?
Count the quotes sent per period and how many became orders, by number and by value. Leave quotes without a decision out of the count or keep them separate. Split by customer and kind of work: new, repeat, one-off, batch.
What do I do with a customer with a low hit rate?
Ask why first: price, lead time, or a price check with no intent to buy. Then adjust how much estimating time each request gets: a full estimate, a budgetary price, or declining when the work does not suit your machines.
Is a high hit rate good?
Not in itself. A high hit rate can mean you fit your customers well, but also that you price too low or only quote what you are sure of. Judge it together with margin and machine load.