Setting a Path to Maximum Profitability

To understand where you are and where you need to go to truly influence the bottom line requires an up-to-the-minute knowledge of your financials. It also requires a financial plan that leverages that data for profitability and growth.


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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