Gross Margin Concepts for Professional Service Firms

Each March we recommend a focus on the product or service mix of our company. The key component of product mix is the gross margin of the differing products. This month we consider the gross margin concept as applied to the service firm. Unlike companies, which offer products, the service firm has labor for its key cost of sales. (For a fuller explanation of Cost of Sales, please see our previous Topic of the Month titled Gross Margin Analysis.)

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