The Economic Motivation for Marketing Professional Services

Consider the case of a small consulting firm with 10 full-time employees, most of whom are technical professionals. Assume that the overall time utilization rate (U) is 0.7, the firm s multiplier (M) is 3.0, and the overall raw labor rate is 25 per hour. Let Pw be the total raw payroll cost per week. Then Pw=(40 hours per week) X (10 employees) X ( 25 per hour per employee) = 10,000. Given this weekly payroll cost, the necessary weekly net revenue is X U X M = ( 10,000) X (0.7) X (3.0) = 21,000. In other words, this small, hypothetical consulting firm needs to successfully market an average of 21,000 of new contract work per week or 4,200 per day based on a five-day work week. 

Assume, for the ten person firm, that the total value of work under contract that has yet to be done is 60,000. Given that the necessary weekly net revenue is 21,000, the 

Size of Firm (persons) Required Daily Sales ( ) Daily Marketing Investment ( ) 

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