The Unit Time Profit Formula

Overview

• What you’ll learn: The exact formula for unit time profit, what each component means, and why this single number captures everything that matters about an amoeba’s performance.
• Estimated reading time: 10 minutes

Introduction

The Grand Historian observes that the greatest weapons of civilization are always deceptively simple. The wheel. The zero. Double-entry bookkeeping. And now: Unit Time Profit = (Revenue − Expenses) ÷ Total Work Hours. Three variables. One fraction. An entire management philosophy compressed into a formula a schoolchild could memorize and a CEO ignores at their peril.

In Japanese, this metric is called jikan-atari saisan (時間当たり採算) — literally, “profit per unit of time.” The unit is yen per hour. A manufacturing amoeba might target ¥3,000 per hour. A professional services amoeba might target ¥8,000. The absolute number matters less than the direction of movement and the comparison to target. Is it rising or falling? Are we above or below the agreed benchmark?

Revenue in this formula includes two streams: external sales — actual invoiced amounts from customers outside the company — and internal transfers — the price charged by this amoeba to downstream amoebas that consume its output. Both count. Both must be tracked. An amoeba that supplies exclusively to internal customers is not exempt from revenue discipline; it simply earns its revenue through internal pricing negotiations rather than external markets.

Expenses are all directly assignable costs: materials consumed, labor at actual cost, overhead allocated by agreed formula, and internal purchases from other amoebas. The allocation formula for overhead (typically floor space or headcount) is agreed in advance and does not change mid-period without negotiation. Total work hours are exactly what they sound like: every person-hour worked by every member of the amoeba during the period, including overtime.

Key Principles

• Revenue includes internal transfers: Internal pricing is not fictional. It is real revenue for the supplying amoeba and a real expense for the receiving amoeba.
• Expenses must be directly assignable: If a cost cannot be traced to this amoeba’s activity, it should not appear in this amoeba’s ledger.
• Hours include overtime: Forgetting overtime hours inflates the apparent unit time profit and rewards overwork with false efficiency signals.
• Units: yen per hour: The result is an hourly rate — comparable across amoebas of different sizes and structures.

In Practice

Calculate unit time profit at the end of every accounting period. If Revenue = ¥5,000,000, Expenses = ¥3,200,000, and Total Work Hours = 800, then Unit Time Profit = (5,000,000 − 3,200,000) ÷ 800 = ¥2,250 per hour. Post this number where every amoeba member can see it. Compare it to last month. Compare it to target. Ask: what drove the change? What will we do differently next period?

Key Takeaways

• Unit Time Profit = (Revenue − Expenses) ÷ Total Work Hours. Measured in currency per hour.
• Revenue includes external sales and internal transfers received from downstream amoebas.
• Expenses = all directly assignable costs including allocated overhead and internal purchases.
• Hours = all person-hours worked including overtime. No rounding. No omissions.