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It’s simple, be nimble – Part 6 Economists define productivity as Output / Input Normally output per hour of labour is measured for comparison over the years or across companies or countries. Multi-factor productivity measurement is also resorted to. This measure mostly used in manufacturing sector is normally quantitative – say x meters of cloth per hour of labour. In the context of services the quantitative measure alone would not be sufficient and both output

It’s simple, be nimble – Part 5 For measuring the performance, management often relies on the equation: Fees – cost = profit This equation highlights the fact that profit is an amount that is left over after subtraction of the actual cost incurred from the fees . I call it a passive approach. Whereas the methodology of “Management By Billing Rates” (Hereinafter called MBBR) discussed in the previous article focuses on profit embedded in the billing rate to arrive at

It’s simple, be nimble- Part 4 Two equations developed in the previous article capture so much of information of the firm in just 4 numbers and makes control of the performance so much easier that I call them – Efficiency Sutras or Efficiency maxims. The sutras are reproduced below for sake of convenience For monitoring individual performance: Fees – direct cost = profit (or more accurately value addition or contribution at individual’s level) For monitoring the firm’s performance:

It’s simple, be nimble- Part 3 Pricing methodology shared below facilitates achievement of all the objectives discussed in the previous article i.e. Maximum utilization of the capacity, full cost recovery ( direct cost and indirect cost) , making sufficient profit, and efficient liquidity management . Step 1:  Ascertain direct cost per hour for every person in the firm engaged in rendering service to the clients (referred to as a direct employee in this series of articles), based on

Pricing strategy objectives. Let me share my thoughts on the primary objectives identified in the previous article. 1.    Cost recovery Whether bad times or good times, making profit is the main objective of every firm. That in other words means , earning enough income to ensure recovery of all the costs. Typically, for professional firms, most of the costs, including the manpower costs, are considered to be indirect costs or overheads. However, for earning income, the firms use