What’s the Industry Standard for Calculating Revenue per Minute?

By Steve Michaels

Questions: Is there an industry standard for calculating per-minute revenue? Is it minutes of talk time, or minutes of talk plus work time, or something else? There are a variety of things we charge by minute, and it can make a big difference in the calculation. How should I proceed?

Answers: Most telemessaging services have a mixed bag of rates for their accounts, such as flat rate for older accounts, other accounts billed per call, and still others billed per minute. Some charge for each transaction, such as an outbound call, a patch, or even a wrong number. Others charge for wrap-up time – the work done after the call is completed. There are no set rules for what to include. Also, in certain parts of the country, telemessaging services charge more than in other parts of the country.

Here is an example of how a particular service accounts for their billing. They bill $32,700 per month, and each segment of accounts has a different profit margin. The number of transactions was 28,000 for the month. Dividing $32,700 by 28,000 equals $1.16 per transaction. There were 27,000 minutes of operator-connect time, which translates to $1.21 per minute. Some flat-rate accounts were charged $85 per month even though only ten calls were received. Those accounts make a whopping $8.50 per call. Remember, pricing for your clients can vary greatly, depending upon the customer and their needs.

Therefore, to answer your question, there is no industry standard. Many services measure the time taken for inbound and outbound calls and charge for both; some include wrap-up time, too. The more you can bill (including wrap-up time) per minute or transaction, the more revenue the business will earn, and the more it is worth. Simply put, the higher your profitability, the greater the sales price of your business.

Steve Michaels is a business broker with TAS Marketing and can be contacted at 800-369-6126 or tas@tasmarketing.com; his website is tasmarketing.com.

[From Connection Magazine November 2012]

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