Profit

[Danielle0904]

Hi Geeks

as a self employed person, what do you class as profit??

is this everything after product cost?? e.g treatment cost £20 - product cost £2 = profit £18

or is an hourly rates taken off too?

this was brought to my attention yesterday when the girl in the hair salon I rent space in did my hair and did it at cost claiming she wasn't making a penny, however the price she charged was the same as my previous (full price paying) hairdresser charged me :irked:

 

[virtues2011]

Hi Geeks

as a self employed person, what do you class as profit??

is this everything after product cost?? e.g treatment cost £20 - product cost £2 = profit £18

or is an hourly rates taken off too?

this was brought to my attention yesterday when the girl in the hair salon I rent space in did my hair and did it at cost claiming she wasn't making a penny, however the price she charged was the same as my previous (full price paying) hairdresser charged me :irked:

Don't be confused with gross profit and net profit. Gross profit is "sales in" less product costs this allows for product margins to be noted.. Net profit is determined by sales in less product cost less overheads and any other expenditure. This give a true figure of where the business stands. You should be working with net profit.

As an example - Your new hairdresser can charge £30 for a cut and blow dry, the same as you old hairdresser charged. The new hairdresser could have 5 staff and spend £300 on magazines a month and her takings could be £500 per week. Your old hairdresser works alone and has no magazines and takes £200 per week..... it is only the naughts at the end of the figures that change in these circumstances. You may only take £200 a week but if you have low overheads etc, no staff other than one you could have a profit of say £50.00. If you take £500 a week, have 5 staff and £300 of magazines a month you may only be left with £10 ...do you see? there are so many variances for explanation it becomes quite difficult...