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.
SECTION 4 OF 7
Hourly Rate to Cover Overhead Only
Now that you know approximately how many billable hours each technician works, multiply that total by the number of technicians you plan to employ in the coming year to give you the total billable hours for the company overall.
Labor costing formula: 583.2 annual billable hours times five technicians = 2,916 billable hours for technician team
Next, divide your total overhead cost by the team’s total billable hours in a year to get the hourly rate that would cover overhead only.
Overhead cost formula: $100,000 overhead costs ÷ 2,916 total billable hours = $34.29 per hour to cover overhead costs only