Recapture Rate is defined as the hourly gross margin dollar amount required to capture your business costs and desired profit within your Revenue Opportunity framework. The math would look like this if you had $200K in yearly business costs, wanted $100K in profit and had 1980 Available Hours to Produce Revenue-
$200K + 100K = $300K / 1980 = $151.52 Recapture Rate per Hour
Once you have this number you can accurately budget and strategize pricing, project bidding, discounts and more importantly no more guesswork on profitability.
Having an accurate Recapture Rate will provide you both a break-even and profit target for the revenue you produce. Profit is real-time!
Throw out the “Percentage Mentality” and understand the math and hard numbers of operating your business. Profit are not percentages, it is money in the bank, and the only way to get it there is to capture it in dollars and cents!
Having an accurate Revenue Opportunity number is a key factor into determining your recapture rate and building your Revenue Roadmap.