How Do I… Work out fixed costs

 

 

Wondering how to calculate your fixed costs? It’s imperative you know these both when you start your detailing business, and you keep on top of the costs regularly once you’re up and running to ensure you’re covering your costs. We’d advise running the numbers every six months or so unless (as is happening currently with energy costs) there’s market volatility 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…

 

Fixed Cost Calculator (download)

 

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…
  • 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 working weeks= 28 days a year to charge for spread over your customers.
  • Working hours in the day – you need to account for travel, lunchtime, admin, answering emails, 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.
  • 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…

 

For more business advice and practical information, why not consider our Business and Marketing course. It’s a one-to-one session with a business expert who will tailor the day to whatever advice and help you need most in your business.

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