SYSTEM AND METHOD FOR DEFINING FEES BY SETTING PROFIT

US 20080133387A1
Filed: 01/08/2008
Published: 06/05/2008
Est. Priority Date: 05/24/2006
Status: Abandoned Application

First Claim

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1. A method for ensuring a desired profit percentage in a business that provides value-added inventory for fees, the method comprising:

receiving electronic sales information representing a sum of fees received for providing a service in connection with the value-added inventory;

receiving electronic inventory cost information representing a cost of goods sold while providing the service;

receiving electronic equipment cost information representing a cost of equipment used during while providing the service, wherein the receiving of the electronic equipment cost information occurs only when equipment is used while providing the service;

receiving electronic billable labor cost information representing a cost of billable labor;

receiving electronic non-billable labor cost information representing cost of non-billable labor;

receiving electronic overhead cost information representing a cost of overhead;

receiving an electronic profit percentage value representing a percentage of the fees charged for the service to be allocated for profit;

calculating a gross margin percent value representing a difference of the sum of fees and the cost of inventory;

calculating a portion of the fee for the service attributed to billable labor; and

calculating a fee for the value-added inventory wherein at least a portion of the fee is calculated as a function at least one of the electronic inventory information, the electronic equipment information and the electronic overhead information, and further wherein a profit value realized by the fee for the value-added inventory is the percentage represented by the electronic profit percentage value.

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Abstract

The present invention provides an innovative and powerful system and method for establishing profitable pricing for a business where the owner will know the exact profit in every fee charged. The present invention provides a business with the ability to project value-added inventory fees based on any desired profit level with changes in production, overhead, and employee costs. In a preferred embodiment, profit is used to determine how to charge out billable labor, including, for example, employees. A convenient and intuitive user interface is provided that automatically calculates fees for the full range of a business'"'"'s value-added inventory, such that profit is provided in each price that is charged to a customer. Preferably, a desired profit percentage of a business'"'"'s sales submitted by a user, and fees charged for billable labor associated with value-added inventory are automatically calculated to achieve the desired profit. In the invention, prices calculated and charged to a customer are fair to the customer, fair to the employees, and fair to the owner or proprietor, and that the fees, when charged to a customer, will result in a predefined percentage of profit.

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20 Claims

1. A method for ensuring a desired profit percentage in a business that provides value-added inventory for fees, the method comprising:
- receiving electronic sales information representing a sum of fees received for providing a service in connection with the value-added inventory;
  
  receiving electronic inventory cost information representing a cost of goods sold while providing the service;
  
  receiving electronic equipment cost information representing a cost of equipment used during while providing the service, wherein the receiving of the electronic equipment cost information occurs only when equipment is used while providing the service;
  
  receiving electronic billable labor cost information representing a cost of billable labor;
  
  receiving electronic non-billable labor cost information representing cost of non-billable labor;
  
  receiving electronic overhead cost information representing a cost of overhead;
  
  receiving an electronic profit percentage value representing a percentage of the fees charged for the service to be allocated for profit;
  
  calculating a gross margin percent value representing a difference of the sum of fees and the cost of inventory;
  
  calculating a portion of the fee for the service attributed to billable labor; and
  
  calculating a fee for the value-added inventory wherein at least a portion of the fee is calculated as a function at least one of the electronic inventory information, the electronic equipment information and the electronic overhead information, and further wherein a profit value realized by the fee for the value-added inventory is the percentage represented by the electronic profit percentage value.
- View Dependent Claims (2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19)
- - 2. The method of claim 1, wherein the portion of the fee covers a percentage of the amount paid for billable labor, a percentage of the amount paid for non-billable labor, a percentage of the amount paid for overhead and the desired profit percentage.
  - 3. The method of claim 1, wherein the electronic billable labor cost information is calculated as a function of a labor rate.
  - 4. The method of claim 3, wherein the labor rate is calculated by:
    - $\frac{billable labor cost per billable minute * productivity factor}{billable labor percentage value} .$
  - 5. The method of claim 4, wherein the billable labor cost per billable minute is calculated by:
    - $\frac{(billable labor cost)}{\begin{matrix} (billable weeks per year * hours per work week * \\ minutes per work hour) \end{matrix}} .$
  - 6. The method of claim 4, wherein the productivity factor is calculated by:
    - $\frac{(hours per work period)}{(billable hours per work period)} .$
  - 7. The method of claim 4, wherein the billable labor percentage value is calculated by:
    - gross margin percent−
      
      non-billable labor percent−
      
      overhead percent−
      
      desired profit percent.
  - 8. The method of claim 1, wherein a second portion of the fee includes a charge for equipment used while providing the service.
  - 9. The method of claim 8, wherein the charge for equipment is calculated by:
    - replacement cost per use+return on investment charge per use+maintenance and supply cost per use+maintenance and supply mark-up percent.
  - 10. The method of claim 9 wherein the replacement cost per use is calculated by:
    - $\frac{(\frac{(equipment cost)}{(equipment life span)})}{(number of uses per year)} .$
  - 11. The method of claim 9, wherein the return on investment charge per use is calculated by:
    - $\frac{(equipment cost * return on investment percent)}{(life span) * (number of uses per year)} .$
  - 12. The method of claim 9 wherein the maintenance and supply cost per use is calculated by:
    - $\frac{(maintenance and supply costs)}{(number of uses per year)} .$
  - 13. The method of claim 9, wherein the maintenance and supply mark-up percent is calculated by:
    - $\frac{(maintenance and supply costs * mark - up percent)}{(number of uses per year)} .$
  - 14. The method of claim 1, wherein a second portion of the fee includes associated inventory charge per use or outside service charge while providing the service.
  - 15. The method of claim 14, wherein the inventory charge per use is calculated by:
    - cost of inventory per use+inventory mark-up per use.
  - 16. The method of claim 15. wherein the cost of inventory per use is calculated by:
    - $\frac{cost of inventory}{number of units of inventory} .$
  - 17. The method of claim 15, wherein the inventory mark-up per use is calculated by:
    - $\frac{(cost of inventory * mark - up percent)}{(number of units of inventory)}$
  - 18. The method of claim 14, wherein the outside service charge is calculated by:
    - (cost of outside service+outside service mark-up charge).
  - 19. The method of claim 18, wherein the outside service mark-up charge is calculated by:
    - cost of outside service*mark-up percent.

20. A system for ensuring a desired profit percentage in a business that provides value-added inventory for fees, the method comprising:
- a sales information module operable to electronically receive electronic sales information representing a sum of fees received for providing the value-added inventory;
  
  an inventory cost module operable to electronically receive electronic inventory cost information representing a cost of goods sold during while providing the value-added inventory;
  
  an equipment cost module operable to electronically receive electronic equipment cost information representing a cost of equipment used during while providing the value-added inventory;
  
  a billable labor cost module operable to receive electronic billable labor cost information representing a cost of billable labor;
  
  a non-billable labor cost module operable to receive electronic non-billable labor cost information representing cost of non-billable labor;
  
  an overhead cost module operable to receive electronic overhead cost information representing a cost of overhead;
  
  a profit percentage module operable to receive an electronic profit percentage value representing a percentage of the fees charged for the value-added inventory to be allocated for profit; and
  
  a fee module operable to calculate a gross margin percent value representing a difference of the sum of fees and the cost of inventory, operable to calculate a portion of the fee for the value-added inventory attributed to billable labor and further operable to calculate a fee for the value-added inventory wherein at least a portion of the fee is calculated as a function at least one of the electronic inventory information, the electronic equipment information and the electronic overhead information, and further wherein a profit value realized by the fee for the value-added inventory is the percentage represented by the electronic profit percentage value.

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Current Assignee
Danny P. Zalta
Original Assignee
Danny P. Zalta
Inventors
Zalta, Danny P.

Application Number

US11/970,989
Publication Number

US 20080133387A1
Time in Patent Office

Days
Field of Search
US Class Current

705/32
CPC Class Codes

G06Q 30/02 Marketing; Price estimation...

G06Q 40/10 Tax strategies

SYSTEM AND METHOD FOR DEFINING FEES BY SETTING PROFIT

First Claim

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Accused Products

Abstract

27 Citations

20 Claims

Specification

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SYSTEM AND METHOD FOR DEFINING FEES BY SETTING PROFIT

First Claim

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0 Petitions

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Accused Products

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Abstract

27 Citations

20 Claims

Specification

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Solutions

Use Cases

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