A math problem that I think I've solved except for one portion. My question is in blue.

Feb 14th, 2015
Price: $5 USD

Question description

The advisor makes $750,000 a year. The number of hours he works a year is 2,250. The number of his existing clients is 110. He spends 8 hours a year with each of his top clients (50% of his client base), 4 hours a year with each of his mid-level clients (20% of his client base) and 2 hours a year with each of his bottom level clients (30% of his client base). His top clients generate 80% of all revenue, his mid and bottom level clients generate 15% and 5% respectively.

  1. How much is the advisor’s time worth per hour overall?

      1. Overall hourly rate = yearly salary/hours worked
  2. How much is the advisor’s time worth for each client segment (This is an equivalent hourly rate)?

55 clients x 8 hours = 440 hours  ? how do I solve for $ per client segment

22 clients x 4 hours = 88 hours  "    "

33 clients x 2 hours = 66 hours  "   "

  1. How much time does the advisor have left for non-client facing activities?  1656 hours

  2. How much revenue does each client tier generate, in total and per client? Tier 1 = $600k 10,900 per client; Tier 2 = $112,500  5113.64 per client; Tier 3 $37,500   1,136.36 per client

  3. How much total time does the advisor spend with each client tier? 440 hours, 88 hours, 66 hours

Tutor Answer

(Top Tutor) Daniel C.
School: Boston College

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