I’m trying to get my mind around my finances and want to put this in terms I, someone who isn’t bad at math but isn’t super, can understand. Something like the title says - for every dollar I spend in X service area of my business, I get $Y back."
So for an area of my business, let’s say that I sold $100,000. With COGS and salary, it cost me $40,000. My gross is $60k, or 60%.
So back to my question, in this case is it “for every $1 I spend in this area, I get $1.40 back”? I just can’t get me head around this, so thanks for the help.
** and yes, I know there are more things to consider like other overhead and operating costs, but I’m trying to keep the example simple.
I like to break things like this down into a dollar figure. Typically i shoot for a 100% return on every dollar spent, but it can 70-80% depending on circumstances. Rarely does a project go so bad that i make less than 50%.
We’re a med spa, so i think in terms of service areas, but I do get what you’re saying . Ty
This is incredibly narrow and potentially misleading advice.
Margins vary wildly between industries.
also sounds sketchy. dont know what his business is but it sounds like he is ripping people off.
Eh, you get into thing like Saas, where your expense is ad spend and lifetime income of a subscription is far greater.
But apply this 100% number to physical goods/retail… you’re going to have a bad time.
yeah i mean i could be legit. I mean you can make bank with an atm business without ‘spending’ anything but gas. whether or not you consider that ripping people off is debatable… Ho hum, ill just sit here quietly making my 6 cents on the dollar whilst getting told I charge too much…
That is rude.
50% net margins are ripping people off now?? what happened to this being a business subreddit?
It’s perfectly normal to make 50% net margins if you have good suppliers and a high-demand product.
hes saying 100% tho…like i said…not sure if its sketchy, might not be.