So I just finished watching Pluralsight's Financial Plan: Part 2 and the portion on achieving profit is contradictory to AHPP 15th Edition Chapter 7.2; page 415.
In AHPP, to achieve a profit at a targeted percentage, they divide the break even rate by its compliment percentage to establish an hourly billing rate with profit. Example: break even rate= $46.00/hr and the firm would like to include a profit at a targeted percentage of 20%. To achieve that, they divided 46/.8= $57.50. To check the math, $57.50x20%= $11.50+$46.00= $57.50.
Pluralsight takes the break even rate and multiplies by 15% and then adds that number onto the break even rate. $46.00x20%= $9.2+ $46.00= $55.20.
Am I missing something here? It seems like an easy concept but both approaches make sense mathematically, but give different results. I am taking PcM Monday morning, so I hope someone can chime in prior.
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