Hi;
On Wed, Oct 3, 2012 at 3:52 PM, Chris Bennett
<[email protected]>wrote:
> I would like any advice on how I should deal with my advertising
> expense.
>
> We only hand out door flyers for advertising. This works reasonably
> well.
> The number of hours we spend doing this is determined by how many days
> we are not working on any projects.
> When there is little work, we spend a lot of time handing out flyers.
> When we have a big project or many small ones, we don't hand out any.
>
Ok.
>
> I have worked out a good system for estimates, but this item has me
> stumped on what to do.
>
> I need to charge an amount on each estimate to cover this cost.
> But we do some jobs that may only be $400 up to jobs that may run
> $10000.
> Also, handing out flyers may generate a call today, in weeks, months,
> etc.
>
> Right, so you don't know:
1) How much revenue will be generated, and hence
2) How much expense goes into a given project.
This strikes me as a cost and management accounting issue which is
currently a little beyond LSMB but a field we'd like to get into.
> If I charge a percentage, I may lose money for this cost.
> If I charge a fee, the small jobs may cost too much and lose getting it
> and I may not get enough from a larger job.
>
Business advice alert:
My view is that a fee is a bad idea, same with putting anything on the
invoice to indicate an actual fee for advertising expenses. I don't know
about your customers or your area so feel free to disregard this advice
here, but if I were the customer, I would balk at seeing such a line item
on the estimate.
I think the typical solution to this problem is to come up with a budget
for advertising, assume you will spend it, and try to set your rates to
cover.
>
> I had health problems last year, so I don't have a yearly cost to work
> with, which might be helpful.
>
> This is a big expense for my company, so I need to get this more or less
> right.
>
There's a budget addon for LSMB 1.3 (rolled into 1.4 core) which allows you
to set expected expenses over a period for a project or department, and
then track how you are doing against that. This may be helpful.
Also if your business has been dormant for a year, you should expect to
spend more with fewer returns at first.
Best Wishes,
Chris Travers
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