Overhead and Profit Calculator Webinar

Step-by-Step Tutorial: Overhead and Profit Calculation for Your Business

Step 1: Understanding Direct Costs and Overhead

1. Start by determining your direct costs and overhead for your business.
2. Calculate labor costs, overhead costs, billable hours, break-even price, and industry average profits.

Step 2: Calculating Labor Costs

1. Determine the labor costs by considering salaries, benefits, taxes, and other expenses for field employees and office staff.
2. Calculate the total labor costs for your company by adding field labor costs and office labor costs.

Step 3: Determining Billable Hours and Break-Even Price

1. Analyze billable hours for field employees and office staff to determine the break-even price per billable hour.
2. Calculate the selling price based on your desired profit margin using the margin method, not the markup method.

Step 4: Using the Overhead and Profit Calculator Software

1. Input your annual overhead costs into the software to determine the cost per billable hour.
2. Utilize the software to calculate labor costs, overhead costs, and net profits for each department in your business.

Step 5: Reality Check and Analysis

1. Compare your actual sales revenue with the projected numbers in the analysis worksheet.
2. Identify any discrepancies and adjust your data entry or planning accordingly.

Step 6: Cash Flow Planning

1. Use the software to plan your cash flow by allocating percentages of sales revenue and expenses for each month.
2. Monitor the projected cash flow to anticipate any financial dips and plan accordingly.

Additional Tips:

• Avoid relying on material markups to cover business costs; focus on labor rates for profitability.
• Ensure confidence in your pricing based on accurate calculations to sustain your business.
• Use the software's detailed reports and charts for better decision-making and financial planning.

By following these steps and utilizing the Overhead and Profit Calculator Software, you can effectively determine your business costs, set competitive prices, and ensure profitability in your operations.