ABSTRACT
We seemed to be bringing in more work and the measurements indicated it was at least partially due to our new pricing structure. Since we had switched our hourly rates from a flat $60 per hour to a range of $48 per hour to $74 per hour, our hit rate on quotes was averaging over 60 percent, compared to averaging less than 50 percent previously. It was still slow times in the industry we predominantly supported so the improved hit rate was helping to increase our sales, thereby increasing our profits. It also seemed our profit margin was stabilizing, which was another measurement of our new pricing structure. The final measure of success I utilized was randomly looking at periods where we had a few high-labor-rate jobs running (i.e., $74/hour), and monitoring how busy (or how stressed) the office staff and/or indirects in the shop were, compared to normal. This was basically a subjective measure and I was probably slightly prejudiced, wanting to prove my point. But, it certainly appeared that when we had a few more jobs with higher labor rates, the indirects (both shop and office) were busier. So, the higher labor rates truly reflected a higher activity level among indirects, thereby proving we were better cost-estimating our indirect time.
