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System and method for calculating fees associated with servicesSystem and method for calculating fees associated with services description/claimsThe Patent Description & Claims data below is from USPTO Patent Application 20070276743, System and method for calculating fees associated with services. Brief Patent Description - Full Patent Description - Patent Application Claims
BACKGROUND OF THE INVENTION [0001]1. Field of the Invention [0002]The present invention relates, generally, to calculating fees for services, and, more particularly, to a system and method for determining fees for services based on costs incurred by a service provider. [0003]2. Description of the Related Art [0004]The ability to determine rates for professional services has been a significant impediment to those desiring to maintain a profitable business while simultaneously providing quality services that are affordable. Multitudes of professional services are provided each year to consumers, and many competing businesses in a respective service industry charge rates that are markedly different. Moreover, consumers who require professional services cannot accurately assess whether the fees they are charged are fair and/or accurately reflect the quality of services rendered. One unfortunate result is that consumers do not call into question the fees they are charged for a professional service or do not question the quality of the service that is rendered without a clear indication of a problem with the quality of service, the fees associated therewith or both. Another unfortunate result is that consumers unfairly call into question the fees they are charged or the quality of a service they receive. [0005]Many businesses that provide professional services require employment staff, equipment and inventory supplies in the course of their business. The costs to a business that are associated with, for example, staff, equipment and supplies directly affect the profitability of a business providing professional services. Costs associated with employment staff can vary significantly depending upon the type and level of skill of the employee. For example, an office assistant is paid a lower salary (or hourly rate) than, for example, a skilled technician. Thus, costs associated with a providing a service depend, at least in part, upon the level of skill of the person either providing the service or contributing to the performance of the service. [0006]Often in the prior art, a service provider may know that many costs are incurred during the course of providing services, however costs are not adequately factored into calculations to determine fees for respective services. The unfortunate result is that fees charged for providing services do not account accurately for all of the costs associated therewith and, accordingly, the fees are set too high or too low, artificially. In case the fees are set too low, consumers will likely be satisfied, but the business cannot realize its financial potential or may lose money. In case the fees are set too high, consumers may be dissatisfied. [0007]Often, fees for services may not be calculated accurately because costs considered by the service provider for equipment represent only the purchase price of the equipment. Equipment, typically, has an estimated life span (e.g., a period of time in which equipment functions properly) and most equipment eventually requires replacement. Accordingly, equipment inherently has a replacement cost per use factor that represents a relationship between the cost associated with using equipment and the cost associated with replacing the equipment. For example, a centrifuge that costs $500 to replace, has an expected life span of five years, and is used two thousand times a year costs has a lower per use cost than one that is used only fifty times a year. One service provider using a centrifuge two thousand times per year should charge, for example, 5 per use in order to factor the cost associated with replacement, while a second service provider using a centrifuge only fifty times a year should charge, for example, $2.00 per use in order to factor the replacement cost. [0008]In addition to the costs associated with replacing equipment, maintenance and supply costs associated with operating equipment should be factored to determine fees for services that require the use of the equipment. By factoring a cost per use value into fees, a return on maintenance and supplies associated with the equipment can be achieved, for example, to offset overhead resulting from the maintenance and supplies and/or to realize profitability in maintenance and supplies for each piece of equipment. The more often that equipment is used, typically, the lower the operating costs per use of the equipment. [0009]Therefore and in view of the foregoing, fees for services that require use of equipment should be calculated to make an accurate return on the equipment, and to represent the costs associated with operating and replacing the equipment. Today, in most service oriented businesses, these calculations are not being made. [0010]In addition to equipment, costs associated with employees and staff are also, typically, not factored adequately into a calculation of fees for services in the prior art. For example, variables such as wages paid, benefits (e.g., health insurance costs, license costs, dues, profit sharing, or the like), taxes paid by an employer and paid time off (e.g., holidays, vacation and sick leave) are not adequately assessed to calculate fees associated with providing professional services. A calculation should be made for each paid person that represents the sum of the person's gross wages, benefits and taxes paid. That sum should be divided by the number of minutes paid annually to the paid person in order to calculate a value referred to herein, generally, as a salary-per-minute value. [0011]Further, it is believed by the inventor that labor associated with activities that are collateral to providing a service should be factored into the calculation of fees associated with professional services. For example, labor associated with setting up equipment, clean-up, etc are not assigned. As used herein, the term, "soft cost factor" refers, generally, to business costs associated with collaterally provided labor, and represents overhead labor costs associated with a respective service. The soft cost factor represents, for example, costs associated with setting up equipment, billing practices, inventory control, or the like. The soft cost factor is preferably a value that is used in a calculation to determine the cost of labor associated with providing a respective professional service. In the prior art FAIRFEES system, the soft cost factor was fixed at preset value, for example, 2, and the product of the salary per minute (as defined above) and the soft cost factor represents an accurate labor cost per minute for hands-on and hands-off time expended by an employee associated with provided a service. [0012]In the prior art, a computer software program has been offered for sale and used for more than one year from the filing date of the present patent application that assisted service providers, and veterinarians in particular, with assessing costs and calculating fees. The software, commercially known as FAIRFEES, was distributed as a MICROSOFT EXCEL spreadsheet that required the end user to have a licensed copy of MICROSOFT EXCEL installed on his computer. The present invention is a stand-alone fully compiled software application that provides inventive features, described below, that improve upon the FAIRFEES spreadsheet application in various ways. [0013]In an effort to determine fees for services that are fair and also accurately represent costs associated with labor to provide professional services, an equation is used to calculate a value, referred to herein, generally, as a "labor rate." For a given service, the labor rate is calculated by multiplying the salary-per-minute value by the soft cost factor, and dividing that product by a percentage (referred to herein, generally, as a "labor percent"), for example, 20%, which sets the labor rate and achieves a desired profit margin. That quotient is preferably multiplied by the estimated or averaged task time (calculated in minutes) to calculate a fair and equitable labor fee for a given service. The labor rate enables the service provider to estimate accurately the costs associated with providing labor for services, and to charge a fair and reasonable fee therefor. Expressed mathematically, a service fee=((salary per minute*soft cost factor)/labor percentage)*task time (in minutes). [0014]Although costs associated with equipment and labor represent a significant portion of a service provider's expenses, it is recognized by the inventor that additional overhead expenses are incurred, such as costs related to leases, mortgages, utilities, advertisements and other operational expenses. It is estimated that labor/benefits/taxes represent approximately 55% of a service provider's accounting expenses. Operating overhead costs account for 22% of a service provider's accounting expenses. Inventory costs represent approximately 20% of a service provider's accounting expenses. Typically, businesses are guessing at the fees and do not know how to cover above costs and only realize a small profit, for example 3%. They do not know how to cost out for their leases, their mortgages, their utilities, their advertisement expenses. For example, 3% is an unfortunate result of low profit, which equates to 100% (i.e., 55%+22%+20%+3%) of a fee for service charged by a service provider In the prior art, service providers were unable to account accurately for labor, equipment, inventory and supplies, and were therefore unable to expense such costs to calculate fees. SUMMARY OF THE INVENTION [0015]The present invention defines a system and method for calculating a fee to charge a customer for performing a service. In one embodiment, the invention is a system comprising a database for storing electronic information in connection with the service. Further, an employee module is defined that is operable to receive from a user and to store in the database electronic employee information representing at least one person providing labor for the service. Also, an equipment module is included that is operable to receive from the user and to store in the database electronic equipment information representing equipment used for the service. [0016]The system further comprises an inventory module operable to receive from the user and to store in the database electronic inventory information representing inventory used for the service. Moreover, a soft cost factor module is provided that is operable to receive from the user and to store in the database a value representing overhead labor costs associated with the service. Further, a service module operable to receive from the user and to store in the database electronic service information representing the service, wherein the user selects respective electronic employee information, respective electronic equipment information, and respective electronic inventory information from the database in order to define labor, equipment and inventory used for the service. The service module further calculates the fee for the service as a function of the defined labor, equipment, inventory and soft cost factor. [0017]Another feature of the invention includes a labor percent module that is operable to receive from the user a labor percentage value representing a total amount charged for a given service. The labor percentage is attributed to labor, and the service module further calculates the fee as a function of the labor percentage value. [0018]Yet another feature of the invention is an overhead module that is operable to receive from the user an overhead percentage representing a percentage to increase the fee. The service module further calculates the fee as a function of the overhead percentage. [0019]Other features and advantages of the present invention will become apparent from the following description of the invention that refers to the accompanying drawings. BRIEF DESCRIPTION OF THE DRAWINGS [0020]For the purpose of illustrating the invention, there is shown in the drawings a form of the invention, which is presently preferred, it being understood, however, that the invention is not limited to the precise arrangements and instrumentalities shown. The features and advantages of the present invention will become apparent from the following description of the invention that refers to the accompanying drawings, in which: [0021]FIG. 1 illustrates an example hardware arrangement according to a first embodiment of the present invention; Continue reading about System and method for calculating fees associated with services... Full patent description for System and method for calculating fees associated with services Brief Patent Description - Full Patent Description - Patent Application Claims Click on the above for other options relating to this System and method for calculating fees associated with services patent application. 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Each week you receive an email with patent applications related to your keywords. Start now! - Receive info on patent apps like System and method for calculating fees associated with services or other areas of interest. ### Previous Patent Application: System and method for defining billable labor by setting profit Next Patent Application: Systems and methods for assignment generation in a value flow environment Industry Class: Data processing: financial, business practice, management, or cost/price determination ### FreshPatents.com Support Thank you for viewing the System and method for calculating fees associated with services patent info. IP-related news and info Results in 0.10346 seconds Other interesting Feshpatents.com categories: Electronics: Semiconductor , Audio , Illumination , Connectors , Crypto , 174 |
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