Estimating the average rate to charge customers can be difficult, but thankfully there are tools out there, like the FireSprint shop rate calculator, that can hash out the details for you.
What is a Shop Rate Calculator?
The FireSprint shop rate calculator takes all of your projected expenses and desired profit margin and generates an average rate you should be charging customers. This calculator can portray many different scenarios, like how much to charge to breakeven or achieve a certain profit percentage. The calculator takes into account many different expense factors that arise in the ordinary course of business. The shop calculators’ overall goal is to produce a rate at which you should bill customers for the services you are providing. Having an effective rate is crucial for a business, especially if it is a startup business.
How to Use
The FireSprint shop rate calculator is very user friendly, with a 10-minute intro video explaining the details found on the website. Monthly expenses like rent, utilities, advertising, supplies and taxes are available for customized input by you. Moreover, there are categories for monthly vehicle, equipment and wages that can be filled out. After you go through and fill out these categories, you will determine your desired profit percentage along with the expected billable hours per day. The calculator will then do all of the work for you and spit out a shop rate per billable labor hour. This is the average amount you should be charging per hour based on the criteria you filled in. Remember, it is always better to overestimate costs and generate a higher chargeable rate than to underestimate and create a lower profit margin.
Benefits
Utilizing the FireSprint shop rate calculator is beneficial for many reasons. The first reason is that it can help put together pro forma financials. Pro forma financials are great for piecing together a new business idea. The shop rate calculator will give you a basis of what to charge customers when beginning business. Having insight on the projected hourly rate will reduce uncertainties in business and help you achieve a desired profit goal. Furthermore, the FireSprint shop rate calculator can also show you areas to reduce expenses. Since you are inputting all the projected or actual expenses, the calculator gives you a clear visual of how each expense category impacts the shop rate. This is vital information needed to reduce costs or shift the shop rate. Additionally, this shop rate calculator can help you project future revenue as the business grows. Since the input variables are adjustable, you can predict the impact a growth in billable hours per day can have on the rate. This is critical in order to accurately forecast growth trends.
Summary
The FireSprint shop rate calculator is not only user friendly, but also beneficial to utilize in your business. This calculator is a great tool for every business, from startups to established businesses. Happy calculating!
Watch as Gene shows us how to use the simple calculator below.