HCHTech
Well-Known Member
- Reaction score
- 4,213
- Location
- Pittsburgh, PA - USA
Prior to this year, my business was split (by revenue) about 70% residential and 30% business/commercial. I had one hourly rate that applied to every customer. In 2015, I billed about 1500 tickets. Excluding hardware & software (so, labor only), my revenue averaged 1.48 hours per ticket.
As of 1/1/16, I acquired an existing computer business in my area, serving 100% commercial customers. They had a different (higher) billable rate than I did, and served just over 100 customers. So, for 2016, I have maintained that same higher billable rate (duh) for the acquired customers, and any new business customers acquired were billed at the higher rate. For business customers I had prior to the acquisition, I have maintained their old, lower billable rate. My plan is to bring them to the higher rate over a 2 or 3 year period.
Here is the revenue summary for the first 8 months of 2016:
Residential (and existing business) Customers
Tickets: 1,034
Average billable hours per ticket: 1.30
Acquired Business Customers
Tickets: 336
Average billable hours per ticket: 1.84
Total company revenue YTD for 2016 is split 40% residential and 60% business. This is a big change from 70/30 for 2015. Note that the 1,034 residential tickets extrapolates out to about 1,551 for Year End, so that side of the business is pretty much flat from 2015.
2016 YTD Net Profit is 286% of the 2015 Net Profit for the same period. Note that everyone including me gets W-2 wages, so this is after all expenses including wages.
While the average billable hours per ticket for the residential side of the business decreased from 1.48 to 1.3 hours from 2015 to 2016, it is clear that the commercial side of the business generates a much higher revenue per ticket (higher billable rate, plus .54 average additional hours per ticket).
I should also point out that the 2015 annual revenue of the business I acquired was almost exactly equal to my 2015 annual revenue. In other words, 100 commercial customers generate the same revenue as 800 or so residential customers.
I say "800 or so" because it is difficult the answer the question "how many customers do you have?" in the residential market. Even good customers can sometimes only call you once per year, or even once every two years. I have several customers who only call me when they get a new computer. Plus, no one ever tells you when they fire you - they just stop calling. So, while I know that I saw 800 different residential customers in 2015, It takes an active customer count of much higher than that to produce those 800 calls. I probably have 2500 customers on my list.
;tldr - If you have or can acquire the skillset necessary to support commercial customers - DO SO. Your bottom line will thank you.
As of 1/1/16, I acquired an existing computer business in my area, serving 100% commercial customers. They had a different (higher) billable rate than I did, and served just over 100 customers. So, for 2016, I have maintained that same higher billable rate (duh) for the acquired customers, and any new business customers acquired were billed at the higher rate. For business customers I had prior to the acquisition, I have maintained their old, lower billable rate. My plan is to bring them to the higher rate over a 2 or 3 year period.
Here is the revenue summary for the first 8 months of 2016:
Residential (and existing business) Customers
Tickets: 1,034
Average billable hours per ticket: 1.30
Acquired Business Customers
Tickets: 336
Average billable hours per ticket: 1.84
Total company revenue YTD for 2016 is split 40% residential and 60% business. This is a big change from 70/30 for 2015. Note that the 1,034 residential tickets extrapolates out to about 1,551 for Year End, so that side of the business is pretty much flat from 2015.
2016 YTD Net Profit is 286% of the 2015 Net Profit for the same period. Note that everyone including me gets W-2 wages, so this is after all expenses including wages.
While the average billable hours per ticket for the residential side of the business decreased from 1.48 to 1.3 hours from 2015 to 2016, it is clear that the commercial side of the business generates a much higher revenue per ticket (higher billable rate, plus .54 average additional hours per ticket).
I should also point out that the 2015 annual revenue of the business I acquired was almost exactly equal to my 2015 annual revenue. In other words, 100 commercial customers generate the same revenue as 800 or so residential customers.
I say "800 or so" because it is difficult the answer the question "how many customers do you have?" in the residential market. Even good customers can sometimes only call you once per year, or even once every two years. I have several customers who only call me when they get a new computer. Plus, no one ever tells you when they fire you - they just stop calling. So, while I know that I saw 800 different residential customers in 2015, It takes an active customer count of much higher than that to produce those 800 calls. I probably have 2500 customers on my list.
;tldr - If you have or can acquire the skillset necessary to support commercial customers - DO SO. Your bottom line will thank you.
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