This is a simple efficiency model for a service provider.

They work 8 hrs / day and 5 days per week.

Clients receive 45 minutes each of the provider's time

Gross revenue per client is $60

The service provider is compensated at 28% of revenue generated

There is 10% slack in the system due to inefficiency.

The owner wishes to reduce slack to increase profitability.

However the provider will demand greater compensation when they are worked harder.

Decrease Slack by 0.25% per step, down to 7.0%

Increase provider comp by 0.25% per step, up to 30%

Indicate the negotiation area where the owner will maintain a similar contribution margin.

Indicate a negotiation area where the owner may be able to strike an increase in contribution margin.

Format your Two way table so it is well labeled and easily readable.

HINT: To complete the table, do not copy the percentages from another cell for the rows and columns. Put them in manually, (e.g. 28%, 28.25%... for the rows, and 10%, 9.75%.... for the columns.

HINT: You can highlight this indication and it will be equal to or below the contribution margin $2073.60-it will show a step-down within your table

HINT: You can highlight this indication in a different color and it will be contribution margin above $2073.60-it will show an additional step down from the similar contribution margin above

HINT: Make sure you have watched the video in the Module about Two-way tables and how to identify contribution margins

23 Assumptions