In Profit Solver each piece of equipment is turned in to a
profit center. Normally, when a piece of equipment fails, the
owner must "come up" with money to pay for a new machine. In
Profit Solver, your clients will pay for the new machine. Each
client is charged their fair share of the equipment used on the
job or service based on usage per year and life span of the
equipment. Each client pays their fair share of operating
supplies and maintenance costs necessary to keep the equipment
running and productive. Each piece of equipment can have a
return on investment, and a profit placed on the maintenance and
supply costs.
Example: Charging the client their fair share of a
vehicle based on the miles driven to and from job sites.
- $32,000 vehicle, life span 8 yrs, driven 10,000
miles each year.
- $32,000 / 8 year life span = $4,000 cost per year
- $4,000 cost per year / 10,000 miles per year = $
0.40 cents per mile.
Client A = 60 miles to and from jobsite is charged $24.00
(60 x .4)
If each client is charge $0.40 cents a mile, in one year
you would receive $4,000 and after 8 years you would receive
$32,000. After 8 years, when the vehicle needs to be
replaced, your clients have paid for a new vehicle; $0.40
cents a mile.
In Profit Solver you can make a return on this
investment. An Equipment ROI (Return on Investment) can be
specified to make a yearly return. If you specify a 10%
return on this investment, the profit would equal $32,000 x
10% or 3,200. $3,200 divided by 8 years is $400 per year.
$400 divided by 10,000 miles = $0.04 mile. By charging each
client $0.04 cents a mile, you would received $400 a year
for 8 years or $3,200 by the time the vehicle needed to be
replaced.
In Profit Solver each piece of equipment may have
operating supplies or maintenance costs associated with it.
The operating and maintenance costs total $3,000.00.
$3,000.00 divided by 10,000 miles would equal $0.30 cents a
mile. If you charge the client 30 cents a mile (driven to
and from their job) you would get reimbursed the $3,000 in
costs. In reality, these costs are considered part of your
overhead expenses. By getting reimbursed for the costs
associated with the equipment it will lower your overhead.
In the example below, if you charge the client $0.74
cents a mile you would cover your yearly costs of $3,000.00,
you would have the money to replace your vehicle, and you
would make a 10% return on investment.
Equipment can also have a markup placed on the operating
supplies and maintenance costs. A markup of 10% would create
profit of $300 ($3,000 x 10%). $300 profit divided by 10,000
miles would add and additional $0.03 cents to the charge per
mile.
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