In this episode Jenny Clark talks about GovCon Cost and Pricing.
How do you determine your Cost and Pricing
Balancing Competitive Pricing with Profitability
- Price Low Enough to Win
- Price High Enough to Profit
- Manage Growth and Cash Flow
- Create Scalable Systems
- What Makes Your Bankable Makes You Buyable
DOES YOUR PROFIT AND LOSS LOOK LIKE THIS?
REVENUE:
Usually Monthly Billings
DIRECT COSTS (AKA Billable Costs)
Direct Labor of Employees Working on Contracts
Direct Travel for trips taken for contract purposes
INDIRECT COSTS (Support Costs, Shared Costs, “Overhead”)
Fringe (Payroll Taxes, Leave, Benefits)
Overhead (Support cost for technical workforce)
General and Administrative (Corporate)
UNALLOWABLE
Interest, Entertainment, Advertising, Sponsorships, etc
If it doesn’t, then I cannot compute your indirect rates, and you will NOT PASS a DCAA Audit.
Solvability RPM (Rate & Pricing Model)
Profit and Loss Statement – Budget and Forecast
- Revenue – What You Know You Can Count On
- Direct Labor Costs – Assume Your Current Billable Headcount Continues
- Direct NonLabor Costs – Travel, Subs – base on history
- Indirect Labor Costs – Leave, Overhead Labor, G&A Labor (Corporate), Business Development Labor, Bid & Proposal Labor
- Indirect Rates Should be Computed from your Profit and Loss
Solvability RPM (Rate & Pricing Model)
RPM Worksheets for Forecasting and Tracking
- Active Contract Listing with Monthly Revenue by Contract
- Indirect Rate Model to Compute from your Profit and Loss
- “What If” Columns to estimate impact of growth
- What is the Multiplier on Labor?
- Wrap Rate Calculator
If Bill Rate is $100 Per Hour, what should the employee pay rate be?
If Employee Pay Rate is $50 Per Hour, what should the billing rate be?
Ask Yourself!!
What would it mean to KNOW where you are making money?
How would accurate information help you win more contracts and grow faster and more profitably?
How would you invest in your company and yourself if you had more cash flow?
What risk are you taking by NOT having the right answers?
Why should you be doing this all ALONE?
Do You Know What Your Wrap Rate is and what it needs to be?
Download our Free Wrap Rate Calculator
wraprate.solvability.com
E-mail me: jwclark@solvability.com
To contact Jenny W Clark
CEO, Solvability, Inc
| Phone | 256-882-6276 |
| jwclark@solvability.com | |
| Solvabilityjwc | |
| Solvabilityjwc |
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