When quoting a job or service, one may calculate the profit via how much they’re making on the job itself, but this doesn’t consider the actual rate you’re making said profit. Therefore, when considering taking on new jobs or work, wouldn’t a better metric always be the profitability per hour, effectively this tells you the potential profit per year of doing that task and the cost opportunity compared to another job.
(Vs. If you were just considered profit vs profit of jobs, this may seem like one job is more profitable since it’s a higher payout but if it’s 3x the time, then you’re actually making more by doing the lesser job if you can pickup more of them).
Is my way of thinking sound?
Would this still apply in manufacturing? As in, of course mfg is producing goods and your main goal is efficiency and producing more units, but considering it’s not your product and your manufacturing for others, units per hour would still be a good metric to track and show overall efficiency and capacity but moreover, tracking profitability per hour would still be a good metric as it would at least tell you the profit potential over time, the cost of opportunity in comparison to other jobs, etc. right?
Yes. When you refer to manufacturing for others, that sounds like job shop work to me, and that’s exactly how that kind of business calculates prices in most cases.