How do I Work Out Fixed Costs?

Wondering how to calculate how much your detailing or valeting business actually costs you to open the doors in the morning?

It’s crucial you know these figures when you start your business, and that you keep on top of the costs regularly once you’re up and running, to ensure you’re covering your costs with what you charge for your services. We’d advise re-running the numbers every six months to ensure nothing has changed which could affect your bottom line.

You can use our fixed cost Excel calculator below to tot everything up and see if your fixed costs have risen.

This is just a basic calculator to get you a figure that goes out the door every month regardless of how much work you do, so not consumables that vary with demand, such as chemicals, fuel, etc. It’s the concrete, immovable bills – rent, van insurance, phone line, accountant fees. These are the baseline you wave goodbye to whether you’ve had 1 customer or 1000, and form a foundation for your overall pricing.

If you want to know how much everything is costing you we have a bigger spreadsheet to help tot up fixed, variable and even per-use chemical costs which you can download here.

Fixed Cost Calculator (download)

You don’t have to use a spreadsheet, but it makes it easier to track changes. If you’re happy doing this on the back of a napkin though, make sure you’re adding them up correctly…

• Divide your costs by WORKING days. If you only work five days a week but you divide everything by seven you’re undercharging by nearly a third! if you’re working it out daily, you probably don’t work every day in the month, so dividing by 30 or 31 isn’t reflective of your earning ability. Minus weekends you’re actually looking at 22 days, and we actually recommend 15-17 as a true reflection.
• Include time off in your calculations. You’ll slowly build up your time off fund over the year then so you can account for paying yourself when you’re on holiday! 52 weeks a year, 48 actual working weeks = 28 days a year to charge for spread over your customers. It’s pennies extra per job, but it needs to be accounted for.
• Working hours in the day – you need to account for travel, lunchtime, admin, answering emails, short days in winter, and running the entirety of the business! If you work out an hourly charge by dividing your day rate by 8, you’re not going to make your day rate and achieve everything you need to and still have down time at home.
• Circling back a bit to the first point: Don’t assume you’ll work every day of the week to make your yearly target. You’ll have slow days, dry patches, and cancellations. Be realistic and make allowances to work at 75% capacity if you have an annual minimum earning requirement. It might price you higher and put off some customers, but that just means you redefine your target market. It’s about being realistic and practical, and you’ll save money on stress medication in the long run..

Again, these are the baseline figures. If you want to know how much everything is costing you we have a bigger spreadsheet to help tot up fixed, variable and even per-use chemical costs which you can download here.

For more business advice and practical information, why not consider our Business and Marketing course. It’s a one-to-one session, tailored to whatever advice and help you need most in your business, from pricing and administration, to digital marketing and social media presence.