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Industry Average Profit Margin / Labor %

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tallmanusa:
I have done some research.

Labor costs 
50% (If you are doing the work yourself, it includes paying yourself a salary for what it would cost anyone to do the job, includes benefits).
Marketing
10 to 30%, depends upon how aggressively you wish to promote your business.
Miscellaneous
10  to 15% includes rent if any.

Bottom line, you should net 15 to 20%.

We have about 25 clients, but we don't make any money, because there are up front costs. So if you are acquiring clients at a rapid pace, profits may be elusive.

I hope that helps.

PMRNC:

--- Quote ---What is the average gross profit margin for the industry to benchmark against - physician billing, midwest? 25 - 30%?


What is the average labor % vs. total expense to benchmark against? Realize this answer depends on a lot of factors
--- End quote ---
!!!

As you have read, this is really not something you are going to get as a general "model".

I have only 6 clients and make a DECENT profit all by myself. My key is low overhead and keeping small enough to maintain personal service. That's it. nice and simple for me.   If I hired or if I took on more, I'd lose money. EACH one is going to give you different answers.

tallmanusa:
The labor costs should not be more than 50%, whether you have one client or 1000 clients. Labor costs are scalable and should be. We have a cap on our labor costs. That is business basics.

Also the profit margin should be around 20% regardless of the number of clients.

I started just like everyone else here, with an idea and a small amount of capital and no clients. From the get go I wanted to build a company with talented people; people who are smarter and more knowledgeable than I am. The Company is a combination of such talent, not necessarily mine.
Now we are acquiring average of one new client daily, and we have four specialty websites. Sometimes next year we hope to break one million in revenue on an annualized basis. I want to make sure that we remain profitable at 20%.

Operating profit is not all; an organization that earns that much revenue has a market value of several millions. If you are the owner and the sole operator of a business, you have very little market value. If you want to create market value that someone will pay for your business, you have to able to show that your business can make money without you.

I think everyone regardless of the size of their business, should consider creating a value for their business; someday all of us would consider retiring and our businesses are our main assets.

PMRNC:

--- Quote ---If you are the owner and the sole operator of a business, you have very little market value. If you want to create market value that someone will pay for your business, you have to able to show that your business can make money without you.

I think everyone regardless of the size of their business, should consider creating a value for their business; someday all of us would consider retiring and our businesses are our main assets.
--- End quote ---

I'm not necessarily saying you are wrong, but there are some of us with smaller goals. My goal from day one was NEVER to get as busy that I needed to 1) hire someone and 2) cease personal communication with every client  Once I hit my limit that was good enough to earn a decent profit and I do think the business does indeed have market value, however that isn't really a thought. I think it really depends on your goals and what your motives are when starting any business. This may sound crazy to some but I didn't get into my own business to get rich or build it to any sort of empire because then I wouldn't be able to keep doing what I do. I have a cousin that graduated college very early and went on to start a small computer business, he loved working on computers, well he grew the business to a huge capacity and just 4 years later he had 4 shops in 2 states, he was miserable, sold the other shops and started over from his own garage. He missed doing what he loved to do, because everyone else was doing it for him.   

rmk123:
Thanks for additional contributions to this post.

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