How Many More Sales Dollars Do You Need To Cover An Expense? | HVAC Pricing Series Part 14

Another Math Formula:

Expense $’s ¸ Profit % = Increased Sales $’s to Cover Expense

Example:
You are considering adding a secretary to your business.

Secretary Salary plus Incidentals/Taxes = $30,000
Net Profit = 5% (.05)

$30,000 ¸ .05 = $600,000 in Increased Sales

You can use this formula for any expense (Cost) you are considering adding to your company: a new truck, a new piece of equipment, a new employee.  Also, note that the sales dollars needed to cover an expense (Cost) go down as your Profit percentage increases (that same $30,000 secretary only requires $300,000 in increased sales at 10% Profit).  This is another great reason to raise your prices and increase your Profit. 

Cal Berry

former Vice-President of Sales and Marketing – Retired at cfm Distributors, Inc.
Cal is a former Vice-President of Sales and Marketing for cfm Distributors with over 30 years’ experience in the HVAC industry.Now retired, he still assists cfm as an educational helper in HVAC product knowledge and marketing.
Cal Berry
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