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labor rate
Hi,
Need some help in working out the labor cost(labor rate) what’s all taken in to account to work it out,
thanks to all who help!!!!
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6 Replies
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If you look at your total labor sales for last year and the number of hours you sold in that year then you could forecast what dollars and hours you need (want) in the upcoming year. This would allow you to figure out what rate you will require to hit that number.
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labor gross profit should be around 70%
If you pay tech $25.00 per hour, divide by .30
or $83.35
It wont be enough if techs are not efficient (billing 8-10 hours a day)
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Frank Scandura wrote:
> labor gross profit should be around 70%
>
> If you pay tech $25.00 per hour, divide by .30
>
> or $83.35
>
> It wont be enough if techs are not efficient (billing 8-10 hours a day)
Shouldn’t we figure in healthg insurence, unemployment ins. etc. into the cost of labor/tech pay?
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Interesting approach.
Why dont you figure out all expenses for the next 3 month, divide it by 13 weeks and then divide by 40 (X number of Techs) or how ever many hours you work. then ad your desired profit margin x % and you should be ok,
By the way Techs and benies are expenses, so are Admin and any drivers / Runners you may hired to clean the Techs Boxes.
If you come up with XX.xx you need to compare to your Competitors and if so with Dealerships in your Customer draw aerea, If your rate is to high to compete you need to start tweeking the expenses down (let go of the Toolbox cleaner) find ways to be competitive.
Let us know how you make out.
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Workings for Cost per hour
Productives’ Salaries
Other Staff Salaries & Benefits
Direct Expenses incl. depreciation
Administration Charges
Finance Charges
Total Cost
No. of Hours in Year 2008 per person
No. of Productives
Total Hours for all the Productives
Total Expenses/Cost per hour
can this be the right mix to workout the Labor rate, in a dealership? or some of it should not be there whilst working out the LR
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Alvito,
You should first determine what your total estimated expenses will be. From there how much net do you want? If you try to do it the other way what happens if your expenses are more than what you are charging?
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