Calculating Daily Running Costs

[EvianBaby]

The company I work for is struggling a lot at the moment with only 3 of the last 9 months running at a modest profit.

I want to try and work out an average day rate of our running costs, including all overheads.

I've got figures on everything from rent, to petrol to wages, etc month on month but of course these all vary every month so what's the most logical way on working out a true (as possible) daily running figure.

I'm basically try to establish if I can convince the powers that be that certain jobs aren't worth our time and that we need to raise our day rate.

[factor-fiction]

For each month for which you have figures work out the relevant number of days. Working days may be the best measure. Then divide the monthly costs by the number of days

if you just want one figure for the 9 month period divide total costs by the total number of days

[chelle7272]

Divide your costs by the working days in the period.
You may want to add a little for contingency.

[EvianBaby]

I know it sounds kind of obvious but as costs such as diesel, parking, accommodation change every month plus some of the wages are paid on an hourly rate and some on a set monthly rate. It is still just best to do an average for the most acurate figure?

[chelle7272]

I would, but take into account whether or not this time of year is a 'peak' time for certain costs.

[EvianBaby]

We don't really have a peak season so I suppose that makes it easier. Thanks both of you.

[Buenchico]

My degree is in maths (with a specialism in statistics).

In your situation my instinct would be to calculate the total running costs over the past year (or at least over an extended period where the relevant factors are largely the same as they are now). Then, of course, divide by the number of working days and (if relevant) add on a small percentage to allow for inflationary changes from the mid-point of the assessed period up until now.

However I might then want to refine that model in order to take into account factors which might have changed significantly (i.e. by more than the rate of inflation) over the relevant period. For example if road fuel costs contribute significantly to the result then (since they've risen well above the rate of inflation) they would need to be weighted accordingly.

Chris

[factor-fiction]

Buenchico's advice is good. Whatever way you calculate the figures it is important to clearly set out the bases of your calculations and all your assumptions- that way your manager/the powers that be can let you know if they want you to run the model again in a slightly different way

[wolf63]

Is there a similar company operating locally that you can 'check out' to see how much they charge and wages they pay. How many managers to office staff and people out and about. Do you own the vans? Could you hire them? Change gas/electric/phone and even postal supplier.