#770 You Don’t Have an Operations Problem. You Have a Sales & Marketing Problem.
Tropical MBA: Entrepreneurship & Founder Lifestyle
Charge Wisely to Succeed
Underpricing services can lead to a lack of trust in your team and delivery issues, highlighting a need for a strong financial model. The labor efficiency ratio, calculated as gross margin divided by direct labor costs and COGS, should be at least 2.0 to ensure profitability. If you're not charging double what it costs to deliver your product or service, you're underpricing. To optimize a business towards achieving $1 million, focus on establishing the right staffing with a 2.0 labor efficiency ratio and limit management and training time to under five hours per week to prioritize sales and marketing.
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