Billing Model Excel

This is a model built on Excel that predicts changes on total revenues and profits in a professional service business when the billing rate is changed.

In any professional service business, it is crucial to fix the billing rate optimally to maximize input revenue and the profit. Given an on-going practice, times come when one needs to consider hiking the billing rate. You need a model to predict what could happen. Without a model, it is a complete guesswork. This model that was developed for a medical practice, it could be easily used for other service businesses. On changing billing structures, client numbers and consequently revenue and the profits. Level of competition, differentiation of the business, client profiles, and type of service provided affects how client change percentage happens. An estimate of this number along with the average billing rates, cost structure, etc. decides the impact on the revenue and the profit.

The model makes it easy to analyze all the "what if" situations. Mostly you, need to check the impact with changes in the client percentages. You look at the breakeven point in the revenue in. This tells you if the revenue and profits will decrease when a certain client percentage change happens. The data can be viewed in chart form for easy interpretation. Rather than doing it by complete guess work, this model lets you do the analysis fairly systematically. Only guess you have to make is the change in client percentage that may happen. It could be a good tool in your professional service business when you are trying to find the effect of billing structure changes.

This model was originally designed to test changes in billing structures for a Medical Practice (Public versus Private Billing), however it is equally suited to any professional practice and can be used to test the impact of fee changes. When billing structures are altered they impact on client numbers and in turn revenue and profit. The Billing Model allows you to forecast what this impact will be. It does this using a Client Number Change Percentage. This is the percentage change in client numbers when your billing structure is changed. For each business this is influenced by the level of competition, differentiation of the business, client profiles, and type of service provided. An estimate of this percentage combined with basic data on average billing fees and cost percentages allow revenue, profit and client numbers to be forecast for the range of billing fee combinations. The model considers two billing structures, Current (1st) and Proposed (2nd). From basic billing and cost data breakeven points at revenue and profit will be calculated for the proposed billing structure. Breakeven points tell you the Client Number Change Percentage at which your current and proposed billing structures provide the same Revenue or Profit. If you change billing structures and the Client Number Change Percentage is greater than the Revenue Breakeven your Revenue will decrease, if it is greater than the Profit Breakeven your Profit will decrease. You can input an Estimated Client Number Change Percentage to forecast the Revenue, Profit and Client Numbers for your business for the full range of current and proposed billing structure combinations. Full results are displayed in easy to interpret Charts and Table format. Details displayed include Revenue, Profit, and Client Numbers.