What indicators are used to calculate profitability in service companies?

Calculating profitability is an important exercise for all companies, and service businesses are no exception. In fact, it enables us to measure the company's ability to generate profits and sustain its business over the long term.

However, calculating the profitability of cleaning companies can be more complex than for industrial or commercial companies. This is because cleaning companies do not produce tangible goods, which can complicate the evaluation of their production and costs. How are they calculated? What indicators should be used? How to optimize profitability?

Key profitability indicators for cleaning companies

Fortunately, there are several key indicators that enable service companies to measure their profitability. Among the most important are :

• Sales: This is the total amount of sales of goods or services made by the company over a given period.
• Gross margin: This is the difference between sales and the direct production costs of goods or services sold.
• Net margin: This is the difference between gross margin and the company's fixed and variable costs.
• Break-even point: This is the level of production at which the company begins to be profitable.
• Economic profitability: This is a company's ability to generate profit, taking into account all its resources, including equity and debt.

Issues and solutions for calculating profitability

Calculating the profitability of cleaning companies can be fraught with problems:

• The difficulty of measuring production: It can be difficult to quantify a cleaning company's production. It does not consist in the manufacture of tangible goods.
• Cost variability: Cleaning company costs can be highly variable. This can complicate the calculation of gross and net margins.
• Taking fixed costs into account: Fixed costs, such as rent and salaries, can have a major impact on the profitability of service companies, even in the absence of production.

To overcome these difficulties, cleaning companies can implement several solutions:

• Set up a cost accounting system: A cost accounting system makes it possible to track costs more accurately and identify sources of profitability.
• Use production management tools: These allow you to monitor production and identify inefficiencies.
• Regularly analyze profitability indicators: It's important to monitor profitability indicators on a regular basis, so that you can identify trends and take the necessary corrective action.

PROGICLEAN ERP software: an ally for the profitability of cleaning companies

PROGICLEAN, ERP software specialized in the management of cleaning companies, offers solutions to help companies improve their profitability.

By adopting Progiclean for cleaning companies, you benefit from a global vision. But also a 360-degree view of your entire business.

Our solutions enable cleaning companies to :

• Monitor costs and production accurately
• Improve inventory and purchasing management
• Optimize sales management and customer relations
• Obtain comprehensive reports on their business and profitability

Progiclean gives you the tools you need to steer your cleaning business towards success.

In conclusion, calculating profitability is essential for service companies. Service companies can improve their profitability and ensure their long-term survival by relying on the right indicators. But also by implementing appropriate solutions and equipping themselves with high-performance tools.

For more information, please contact us.