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Cake day: November 20th, 2023

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  • You’ll need a little more info, but here’s how I would do it

    1. Calculate annual average client revenue (annual service revenue/active clients)
      1. I would probably just include services here and not product sales
    2. Calculate annual average client cost of services
      1. Include cost of service goods (dye etc) (annual cost of goods/active clients)
      2. Average hours per service * your rate
      3. add these two numbers together to get average client cost
    3. Subtract the two numbers to find out average profit per active client
    4. Figure out how many active clients are in the book
    5. Multiply profit per active client by active clients
    6. Don’t pay more than 50% of that number
      1. 50% because you need to have cashflow in your first year. This is a one time cost so after the first year it won’t impact you anymore

  • I would start by doing some quick math- assuming close rate stays the same, how many leads do you need to pull in to hit your desired commission, or how much bigger does the average value of leads need to be. Then ask yourself, can you adjust the way you’re working to hit either of those goals? If the answer is no it’s time to move on. You can’t single handedly fix a sales funnel but you can determine how much time you’re willing to waste not making enough money.