Setting a Path to Maximum Profitability
Desired Net Profit
Desired Net Profit
Now, you know what rate it takes so you don’t lose money, but how much should you charge for labor so your company makes a profit? Figuring out that direct labor rate begins with determining your desired net profit.
Net profit equals your profit divided by total sales. For service companies, 25 percent is considered a good starting point. You can adjust to 30 percent or higher as you continue to grow the business.
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5: Setting a Path to Maximum Profitability
Chapter 5, Section 6 of 7