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.
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 65%.
Example:
A) Labour Gross Profit = R182,241 B) Labour Sales = R253,112 C) Labour Gross Profit = 72% (A ÷ 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 65%, you will struggle to achieve a
reasonable level of profitability when you reach the Direct Profit of
your department.
This statistic has a tendency to be lower than that of the Service Department due to lower Recovery Rates and higher Productive costs.