CA AnKiT BoHrA (AB)
(Manager)
(25955 Points)
Replied 14 November 2014
it differs from company to company dear..!!!
Spirit
(Learner)
(450 Points)
Replied 14 November 2014
Agreed with Ca Ankit bohra- it differs from company to company.
use your total company overhead and total field hours. Divide your total overhead last year by the total number of productive hours (that is, revenue-generating hours). Use only the hours that your field employees actually worked for customers. Cleaning the shop, training hours, meeting hours, vacations, holidays, and sick days don’t count in this equation.
If you have departmentalized, then do the same calculation as described above except for the overhead for each department. You’re likely to find one department has a much lower overhead-cost-per-hour than another. At this point, you know how little you can charge a customer in slower times of the year and still make a profit on an individual job.
The result can be very sobering. It’s common for me to find this number above $60 per hour. The idea is to identify it, get it down to a reasonable number, and compete..
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