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EP286: How Contractors Can Calculate True Labor Costs and Boost Profits
Ep. 286
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If you’re paying an employee $30 an hour, they don’t actually cost your construction business $30 an hour.
In this episode of the Hammer & Grind Podcast, Brad Huebner breaks down how contractors can calculate their true labor costs and use the right labor burden rate to protect their profit margins. Your employee’s hourly wage is only one part of the total cost. Payroll taxes, workers’ compensation, employee benefits, paid time off, training, meetings, and other non-productive paid hours can significantly increase what that employee actually costs your business.
You’ll learn how to:
- Calculate your true labor burden rate
- Separate employee wages from total labor costs
- Account for payroll taxes and workers’ compensation
- Factor in employee benefits and other direct labor costs
- Calculate the cost of non-productive paid time
- Determine your true cost per productive hour
- Understand the difference between markup and gross profit margin
- Avoid underpricing labor on construction estimates
- Identify hidden labor-related profit leaks
- Price your labor correctly across multiple employees and crews
If you’re a contractor who wants better construction estimating, stronger profit margins, and a clearer understanding of what your employees actually cost your business, this episode is a must-listen.
Get the Labor Burden Worksheet:
Use the worksheet to calculate your labor burden rate and understand your true labor cost per hour, day, week, month, and year. The worksheet can also help you calculate costs for different employee teams and crews.
Links to resources
Grab my free job costing worksheet and start job costing every job right away.
https://go.hammercrm.com/widget/form/4Bws6E9GGX0RZPoED1bn
Want to go deeper?
Check out the Contractor Profit Blueprint: https://www.thecontractorprofitblueprint.com/
Book a strategy call with Brad: https://hammerandgrind.com/qualification-website
Enjoying the podcast? Visit our website at https://www.hammerandgrindpodcast.com for the latest episodes, resources, and more.
Have a question, story, or topic you'd like us to cover? Leave us a message here: https://www.hammerandgrindpodcast.com/voicemail.
We'd love to hear from you, and your message could be featured on a future episode!
Help us get the word out to other contractors by leaving us a review or sharing our podcast!
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