Cost and Revenue - How WFM affects it. Part - 2
Updated: Feb 7, 2022
This article is a must-read for any Outsource Vendor management team and outsourced WFM team.
A client-side WFM team may also find it helpful to see the things that have to be considered in an outsource WFM team as well, but this is more FYI for them.
In the last blog, I had mentioned that in the business world, Revenue is the most important thing and the sole reason why businesses exist.
Two crucial parts of Profit are the cost and the Revenue.
The previous blog spoke about how WFM is involved in the cost parameters of a contact center.
In this blog, let's see how Revenue is calculated along with different billing/pricing models.
Note: Revenue Models, Pricing Models, Billing Models, and Commercials means the same with just different names.
To quickly recap, below are the different parts of the cost structure.
Support Staff Salary
Once we have all the details about cost, we can calculate the expected Gross Margin/Profit.
Each company has its own agenda for the Profit expectations. It depends upon Geography, Current Market Status, Competition, etc.
I've attached the file at the end, which shows simple calculations of cost and different billing models. Be sure to check that file out.
I've taken an example of 20% as Profit.
Considering that, let's look at each billing model along with Revenue.
Per FTE per Month
This is the most straightforward calculation and a very famous billing model.
Below is the calculation
Cost - $194887.34
Expected Profit - 20%
Required Revenue - $233864.81
No. of FTE - 150
Per FTE Rate = Required Revenue/No. of FTE
i.e. Per FTE Rate = $233864.81/150
Per FTE Rate = $1559.10
Here, there could be two options considered where one is considering shrinkage and the other excluding shrinkage.
Per Seat Per Month
After the Per FTE model, this is the next easiest model.
Below is the calculation Cost - $194887.34 Expected Profit - 20% Required Revenue - $233864.81 No. of FTE - 150 No. of seats Required - 125 Per Seat Rate = Required Revenue/No. of Seat i.e. Per Seat Rate = $233864.81/125 Per Seat Rate = $1870.92
In this method, seat utilization plays a major role, and the way we schedule agents is the deciding factor.
This is yet another simple calculation, as shown below.
No. of FTE - 150
Hours per Month - 176
Cost - $194887.34 Expected Profit - 20% Required Revenue - $233864.81
Per Hour = Revenue/(FTExHours)
i.e. Per Hour = Revenue/(150x176)
Per Hour = $8.86
There could be two options of with and without shrinkage even in this method.
Apart from the above-mentioned billing models, there are other models, too, which will be explained in the next blog.
Thanks for reading☺
Disclaimer: The attached sheet and the explanation are only for illustration purpose and doesn't represent any client or company.
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