Service Price Calculator







 

About Service Price Calculator (Formula)

The Service Price Calculator formula is used to determine the price for a service based on the materials cost, labor cost, and desired margin. The formula is as follows:

Service Price (SP) = (Materials Cost (MC) + Labor Cost (LC)) / (1 – Desired Margin (DM) / 100)

In this formula, the Materials Cost (MC) represents the expenses incurred for the necessary materials or resources used in providing the service. This can include the cost of raw materials, supplies, or any other direct costs associated with the service.

The Labor Cost (LC) represents the wages or salaries of the individuals involved in providing the service. This includes technicians, employees, or contractors who contribute their time and skills to deliver the service.

The Desired Margin (DM) is the profit margin that the business aims to achieve on top of the costs. It is expressed as a percentage. By subtracting the Desired Margin (DM) as a percentage of the total cost from 100, we obtain the divisor for the formula.

The formula calculates the Service Price (SP) by summing the Materials Cost (MC) and Labor Cost (LC), and then dividing the result by 1 minus the Desired Margin (DM) divided by 100.

By using this formula, businesses can ensure that the service price covers the costs incurred and provides the desired profit margin. It allows for flexibility in adjusting pricing based on changing costs or profit objectives.

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