Benchmark Cost of Service

Before we compare your studio's cost of sales to the benchmark, please answer the following questions:

Is your studio home-based or retail-based?

Home-based
Retail-based

Do you use accounting software (like Quickbooks or SuccessWare) to manage your studio's financials?

Yes
No

Step 1 - Deposits

Add up your annual deposits from your bank statements and enter them in the field below.

If you use Quickbooks, you will want to create an annual Standard Profit & Loss Statement.

Step 1 - Sales

Enter your total annual sales in the field below.

Step 2 - Sales Tax

Total the amount of annual sales tax payments made during the analysis period and enter them in the field below. If you use your accounting software to create invoices and calculate sales tax, then skip this step. Otherwise, total the amount of annual sales tax payments and enter them in the field below.

Step 3 - Refunds

Total the amount of annual client refunds you paid and enter them in the field below.

How much can you afford to spend in Cost of Sales Annually?

How much are you currently spending annually in Cost of Sales?

Cost of Sales is a critical Benchmark for your business, because it has a direct effect on your studio's profitability. You need to know how much it costs you to produce your sales each year, and that amount should not exceed the recommended Benchmarks.

Here's a short list of key Cost of Sales expense items. Enter how much your studio spends annually for each of the following and get the answer you need:

Step 1 - Lab & Materials Costs

Total the amount you spent annually on the following and enter it in the field below.

  1. Lab costs
  2. Albums and frames
  3. Shipping, packaging and merchant service charges

Step 2 - Employee Expenses

Total the amount you spent annually on production employee expenses (excluding yourself) and enter it in the field below:

  1. Wages and salaries paid
  2. Payroll taxes paid
  3. Workers compensation & Health insurance

Step 3 - Contract Labor

Total the amount you spent annually on production contract labor costs and enter it in the field below.

  1. Wedding and portrait session assistants
  2. Production personnel - editing, imaging, photoshop, framing, packaging, etc.

Confirm Your Information

Annual Sales

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Annual Cost of Sales

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Given your current annual sales, here's how much you can afford to spend annually on Cost of Sales expenses according to the recommended PPA Benchmark. You can also see how much studios who participated in the latest Benchmark Survey spent on their Cost of Sales.

Here's how much you now spend annually on Cost of Sales expenses, and how this compares to the recommended PPA Benchmark. You can also see how much studios who participated in the latest Benchmark Survey spent on their Cost of Sales

  Cost of Sales Benchmarks
  Your Studio
 PPA Recommended All Studios Top Studios
Your Cost of Sales Percentage % % %
Your Annual Cost of Sales

 

Summary

If your Cost of Sales exceeds the Benchmarks, your studio's bottom line profitability will be adversely affected.

What is your actual Cost of Sales level?

These are the types of expenses you'll need to consider as Cost of Sales expenses:

  Lab & Material Costs
Lab costs
Albums & frames
Shipping, packaging and merchant service charges
Employee Expenses
Wages & salaries paid
Payroll taxes paid
Workers compensation & Health insurance
Contract Labor
Wedding & portrait session assistants
Production personnel - editing, imaging, framing, packaging, etc.

If your Cost of Sales exceeds the Benchmarks, your studio's bottom line profitability is adversely affected.

A key finding of PPA's latest Benchmark Survey is that the ability of a studio to control its costs (including Cost of Sales) was the prime factor in deciding bottom-line performance for both home and retail studios - not the capacity to increase sales. Learn more about strategies for controlling costs - and improving your bottom line - in PPA's Business Handbook.



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