Fix the comparison boundary before calculating
Records and assumptions to align
- Use completed-service revenue net of refunds/discounts on one tax basis. (not complete)
- Include service delivery, setup, processing, cleaning and reset time consistently. (not complete)
- Reconcile consumables and variable provider cost/commission by service. (not complete)
- Name secondary constraints such as technician skill, room, equipment or simultaneous processing. (not complete)
- Build lower/base/higher appointment counts from observed capacity or explicit scenarios. (not complete)
| Field | Required unit | Preferred evidence |
|---|---|---|
| net service revenue | CU/service | booking/payment record |
| included variable service costs | CU/service | product, payroll/commission and payment records |
| constrained chair-hours | chair-hours/service | service protocol and observed schedule |
Build a reproducible scenario
contribution per constrained chair-hour = (net service revenue - included variable service costs) ÷ constrained chair-hours
- net service revenue
- Completed-service revenue after stated discounts/refunds (CU/service) — booking/payment record
- included variable service costs
- Consumables, delivery labour/commission, payment and named variable costs (CU/service) — product, payroll/commission and payment records
- constrained chair-hours
- Time during which the scarce chair/resource cannot serve another compatible booking (chair-hours/service) — service protocol and observed schedule
If processing time allows another compatible service, model the actual resource constraint rather than charging all elapsed time to one chair.
Fictional three-service mix
The scenario compares equal 10-hour chair capacity and uses invented service rows.
| Case | Declared inputs | Substitution | Result |
|---|---|---|---|
| Service A | 90 revenue; 30 variable cost; 1.0 chair-hour | (90 - 30) ÷ 1.0 | 60 CU/chair-hour |
| Service B | 150 revenue; 60 variable cost; 2.0 chair-hours | (150 - 60) ÷ 2.0 | 45 CU/chair-hour |
| Service C | 70 revenue; 25 variable cost; 0.5 chair-hour | (70 - 25) ÷ 0.5 | 90 CU/chair-hour |
| Feasible mix | 4 A, 2 B, 4 C = 10 chair-hours | 4 × 60 + 2 × 90 + 4 × 45 | 600 CU total contribution |
Stress-test the uncertain inputs
| Variable | Lower case | Higher case | What it tests |
|---|---|---|---|
| Duration convention | Observed efficient cycle | Full downside/reset cycle | Tests rate stability |
| Appointment mix | Observed low-demand service case | Feasible high-demand case | Tests total contribution, not wishful substitution |
| Secondary constraint | Chair only | Technician/room/equipment also binds | Tests the correct denominator |
Stop and review when
- Services use inconsistent duration or cost boundaries. (not complete)
- The proposed mix exceeds observed demand, skill or equipment capacity. (not complete)
- Contribution rate is optimised while total contribution falls. (not complete)
Turn the scenario into a controlled decision
- Reconcile the baseline to current records and name the evidence owner.
- Run the base case, then change one uncertain input at a time.
- Record the chosen response, approval limit, review date and stop trigger.
- Compare actual results with the original boundary before reusing the assumption.
Avoid these mistakes
- Ranking by service price per clock hour. (not complete)
- Treating processing time as free without checking the actual chair/resource constraint. (not complete)
- Assuming all demand can move to the highest-rate service. (not complete)
Questions to resolve before approval
- Should a low chair-hour service be removed?
- Not from this metric alone. It may support relationships, fill otherwise idle capacity or contribute to a feasible mix.
- Can retail sales be included?
- Add retail contribution as a separate row and only attribute it to a service when the evidence and decision boundary support that link.
Methodology and source boundary
- Capacity-Constrained Profit Mix methodology — Margin101: Product-owned scarce-resource contribution boundary.
- Product Mix Profit methodology — Margin101: Product-owned weighted mix and total-contribution boundary.
- Occupancy Break-even methodology — Margin101: Product-owned occupied-capacity boundary.