In: Finance
Dental Diversity provides three basic service appointments; Cleaning, Check-up, and Full service. Total annual costs average $750,000. An RVU analysis indicates the following:
Annual Average Appointments RVUs/appointment
Cleaning 3,000 4
Check-ups 3,500 6
Full Service 1,700 10
B. If the goal is a 37.5% profit margin, what should be the price for each type of appointment?
A | B | A*B | ||
Service Type | Annual Average Appointments | RVUs/appointment | Total RVU | |
Cleaning | 3,000 | 4 | 12000 | |
Check-ups | 3,500 | 6 | 21000 | |
Full Service | 1,700 | 10 | 17000 | |
Total RVU(C) | 50000 | |||
Total annual costs average(D) | 750,000 | |||
Cost per RVU(D/C) | 15.00 | |||
Profit margin required | 37.50% | |||
Sale price per RVU [Cost per RVU/(1-profit margin)] | 24.00 | =15/(1-37.5%) |
A | B | A*B | |
Service Type | RVUs/appointment | Sale price per RVU | price for each type of appointment |
Cleaning | 4 | 24.00 | 96 |
Check-ups | 6 | 24.00 | 144 |
Full Service | 10 | 24.00 | 240 |
Hence,
price for one appiotment of Cleaning = $96
price for one appiotment of Check-ups= $144
price for one appiotment of Full Service= $240