If correct, it will help you absorb a high percentage of your overhead.
Let's recap just a bit. A few months ago we talked about why most companies go out of business. The number one problem was improper labor pricing with the number two problem being cash flow. Our objective, beginning with the February article, was to walk you through the same process we use in our full-day seminars to help you determine what you must charge to cover your real costs of doing business while generating the profit you desire.
The first month we discussed equipment replacement costs. We found that equipment replacement costs were normally your second highest cost of doing business in the entire company. Last month we discussed your highest cost of doing business, nonbillable time. We found that average nonbillable time for installers was 20-35 percent while nonbillable time for service techs ran 40 to 55 percent of their total time. Hopefully by this point you have filled out the first two worksheets and are ready for this installment which deals with material markups.
