The Elements of the Right Price | HVAC Pricing Series Part 8

The Right Price Must Cover Direct Costs, Overhead Costs and Profit

The Whole Pie Chart Below Is the Right Price

The Whole Pie = The Right Price = 100%

Assumptions: Direct Costs = $2000

Overhead Costs = 28%

Profit = 10%

The Right Price = Direct Costs + Overhead + Profit

The Right Price (100%) = $2000 (?%) + 28% + 10%

Therefore: The Right Price – Direct Costs = Overhead + Profit

The Right Price (100%) – $2000 (?%) = 28% + 10%

And: The Right Price – (Overhead + Profit) = Direct Costs

The Right Price (100%) – (28% + 10%) = $2000 (?%)

100% – 38% = $2000 (62%)

OR

100% – 38% = 62%

Therefore: Direct Costs are 62% of the Right Price

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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