Before you read this page, please read Labour Gross Profit to ensure that you have the true understanding of the performance area that your are measuring.
this KPI tells you the percentage of money you have retained from the Hours Sold after you have paid your Technicians.
All profit-related KPI are usually measured against turnover, and in this instance the starting figure for your profit retention in the Service Department is 75%.
You could also view this to mean that you pay your Technicians less than 25% of the value of the Hours Sold for the hours that they have worked productively.
Example:
A) Labour Gross Profit = R34,437 B) Labour Sales = R42,240 C) Labour Gross Profit = 81.53% (A รท B X 100)
Discussion:
It is important to maintain a high profit margin in this KPI because the Departmental Expenses erode much of it away. Therefore if your performance in this area is below 75%, you will struggle to achieve a reasonable level of profitability when you reach the Direct Profit of your department.