you must first run some employee cost calculations to figure out your true cost of doing business and labor rates.
Use this ServiceTitan Labor Rate Calculator to tabulate billable hourly labor rate that covers your CODB just enough to break even, and then calculate the ideal labor rate you should charge to yield your net profit goals.
It's important to be realistic about your labor cost percentage, especially when you figure in time spent doing general and administrative tasks, such as.
Utilization rates vary by industry, and for the skilled trades it tends to be lower for example, can do billable work all hours of the day or night..
At 50 percent efficiency rate, technician does four hours of billable work, spending half inside home or on job site performing services. .
Remember, while HVAC or electrical system install may mean 50 percent efficiency for that day, you need to figure the average total of every work day throughout the year and it's all of your technicians work on large install jobs. .
By the number of technicians you plan to employ in the year to give you the total billable hours for the company overall, Now that you know how many billable hours each technician works, multiply that total. .
Go step further and see how much you'd need to charge hour to cover both overhead and the cost of labor for all of your technicians working during billable hours.
By the total billable hours to get your technician billable payroll cost, benefits, and other costs and you employ 5 techs.
By the percentage of cost in your projected budget, To find your labor rate, you divide the break-even labor rate—.
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