Marginal Revenue Vs. Marginal Cost For Increasing Plumbing Contractor Cash Flow And Profits



For the Mechanical/Plumbing Contractor Cash Flow is Key

This Article Will Focus On strategies to increase cash flow and profits by understanding and applying the principle of MR>MC, where MR = Marginal Revenue and MC = Marginal Cost.

Every Day You Are ? Presented With opportunities to invest your Plumbing and Mechanical Company?s hard earned money. Apply the strategy of MR>MC so that it will generate the most cash flow and bottom line profits.

Very Few Opportunities ? Are worth pursuing and most of them are not. The answer is having a fast and easy system to help you separate the priceless few from the worthless many.

First And Foremost DO NOT TRUST YOUR GUT ? It may sound counter-intuitive because it is. Especially since most successful Plumbing and Mechanical Contractors trust their gut for so many decisions.

When It Comes To MR>MC ? Your gut can lead you down the primrose path of mediocrity or complete destruction depending on how large the amount of money is at stake. The reason is simple there are far too many variables to consider and here are seven of them to get you started:

Complex Decision Modeling ? And statistical analysis using the scenarios built into Excel is one of the best tools available; however, for a construction company with annual revenues under $5,000,000 it could be overkill, similar to hunting house flies with a 16 pound sledge hammer.

An in-house bookkeeper with one 19? computer monitor

Think wisely when investing in your business.

An in-house bookkeeper with one 19? computer monitor

Think wisely when investing in your business.

The tiny numbers are hard to see and causes eye strain
The bookkeeper wastes 30 minutes a day due to poor equipment
Every year your Plumbing and Mechanical Company loses $821.79 in bottom line profits and cash flow!

We Have Simple ? Tools to help our clients make intelligent informed decisions on which opportunities to accept and which ones to reject.

For Any Opportunity Give Us Six Pieces Of Information:

Total Cost Per Month = $1,095.73

From That Information ? You provide and pulling some reports from your Properly Setup QuickBooks file we can generate a simple analysis that you can use to make an intelligent informed decision.

Hourly Pay Rate = $15.00 X 10 Hours A Week X 4.34* Weeks = $651.00

Health Insurance Premium = ÿÿÿÿ$0.00

Knowing Which Opportunities

Payroll Tax, FICA = $40.36 + Medicare = $9.44 + Workers Comp $6.51 = ÿÿ$65.75

Overhead For Office Space + Computer + Office Supplies + Utilities + Misc. = $100.00

To Pursue Is Priceless

Hourly Rate You Charge Your Customers : $75.00 X 2 Hours For Training = $150.00

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