How to prep MUCH better project fee quotes
What if youโre trying to grow and scale your biz, but the amount you pay yourself each month seems to be shrinking?? ๐ค
And what if youโre pouring employee hours and marketing dollars into a part of your business that nets you a profit margin of 5% when you could be focusing on the 30% margin activities instead? ๐คฆ๐ผโโ๏ธ
Yikes. Letโs use our financial know-how to help you make MUCH better, more informed decisions in your biz. Today.
Unless you're a CPA, Profit per Project or Profit per Client probably isn't top of mind, friend.
Many people look at divisions in their business through something called a segmented income statement and others look at revenue per client.
โฌ๏ธ These are both great starting points.
But the purpose of determining Profit per Project (aka โJob Costingโ) is really to help you track the cost of individual projects by looking at both direct (labour, materials) and indirect (overhead) costs.
๐ฅ Because by understanding the costs for a job/client at a more granular level, youโll be better positioned to budget, plan and charge accurately for similar projects in the future. ๐ฅ
You might also discover some ways to cut costs or find items that should be billed directly to a customer.
In order for you to calculate your Profit per Project, youโll need 3 things:
Direct cost of labour for your project
Direct cost of materials for your project
Indirect costs or overhead
To do your calc, take your revenue from the specific project or client and then reduce it by items 1, 2 and 3 above. Et voila!
A note about overhead: youโll most likely have to come up with some pro-rated amount in order to accurately estimate how much o/h is associated with your project.
Iโve seen a variety of methods used in the past, but my fav is to divide the revenue from your specific project by the total revenue for your company for the duration of the specific project (i.e. 6 or 12 months). Youโll get a percentage/proportion and Iโd advise using that percentage as a way of allocating overhead or indirect costs to your specific project's revenue.
Simple?
I mean, the concept is simple, but Iโll be honest and say it can be tricky to do this IRL. Some people - like moi - have a masterโs degree in this stuff for a reason lol. ๐คท๐ผโโ๏ธ
Helping you use the numbers in your biz to make better decisions that lead to more profitability is basically my love language.
And itโs also one of the reasons why I created my signature offer, โThe 7-Figure CEOโ. โฌ๏ธ
A business transformation Experience
This offer is perfect for the entrepreneur who knows sheโs leaving money on the table aka most likely not charging enough, but has no idea what โenoughโ really means.
Itโs also perfect for the person who is (wisely) more afraid of the consequences of NOT investing in sophisticated financial/scaling support - especially when there are BIG contract opportunities on the horizon and scaling up fast is imperative.
Basically, she can't afford to not invest in support now.
If this is you, Iโd love to start a convo.
Reply to this email with the word โSpainโ and letโs explore whatโs possible for you, your life and your biz. (More on Espana lata!!! ๐)
Take care and talk soon,
Tanya