my direct labor rate is to high, I need a drink

[Kris Stevenson]

I've been doing a good job of tracking our production numbers this year. I'm even keeping track and writing a check to myself for my production hours when I'm on the truck, which is included in the labor rate. It's been eye opening, other than February my labor rate is to high. Jan. was 30%, Feb was 18% (we had some great commercial jobs) and for the 1st-15th of March we are at 34%.
I really want my number to be 25% or less. I know higher job tickets (an $8,000 ticket would help), better routing and better productivity will help get the number down. Our hours on the job vs. hours for the day is about 74%.
We have two people on a van and I'm thinking if we go to one person on a van my number might get better.
What are some other ideas?

 

[Shane Deubell]

Not to be a smart a$$ but sell more great commercial jobs. We all look like geniuses with 10-20 more encap jobs a month.

 

[Becker]

dual wanding on alot of jobs are worth it.

But if single wanding, send a single guy out on most jobs.

 

[JS41035]

So what % labor do you bid the job at? For instance , if you bid a 300 dollar job and figure 25% labor. You have 75 dollars to keep that on target.
Assuming you have a reasonable production rate established. Say 3 crew hours at 25 per hour.
So two things can happen. You underbid the job,or the production rate of unsupervised employees plummets (human nature).
However if you can take that 75 and basically offer it to your techs Not as a% but rather as hours. "This job should be 3 hours including drive time. If you finish in 2.5 you will be paid for 3. ". I know that can bring up QC issues but it can also get people to hustle a bit. In that scenario they make 12% more. Not to mention any upsell. Your labor stays on target. What I've found is tht production rates skyrocket when the boss is standing there.
If that happens take note of there production rate. Compare it to jobs that you are absent. If there is a drastic difference use that as a motivator " Bob you mentioned that you would like a raise. We'll if you worked at the rate you did today you could average 30 percent more". If a job is rough an they are working hard but still not making high production rates. They can still fall back on there base hourly rate. Even then you can figure out a quick production rate and offer an incentive to cut your losses.
All of this depends on detailed production rates on a lot of surfaces. And quality has to be hammered in again and again.



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[knoxclean]

All comes down to knowing your numbers. Justin nailed it. Bid it to make a profit and if your guys are slacking on the job and are missing the mark do some training. Duel wand or send one guy unless your second guy is busy upselling while tech 1 is wanding.

 

[Kris Stevenson]

On a two person crew, what are the ways to split up the commission?
25% to the crew chief minus the tech labor
or
15% to the crew chief and 10% to the tech.
When we do some bigger commercial jobs there's four of us there sometimes, how do you spit that up.
I love the idea of Commission because it would set my labor rate, I just need to figure out how it's going to work for me.

 

[Brian H]

Don't forget that you will have decreased productivity with a one man crew. The average job will take longer so you will have higher labor cost to $ produced if you are factoring hourly rate as part of the pay.

Your equipment will also be more "costly" if factored as a percentage of the job. To produce the same dollar amount you will need additional equipment/vehicles.

 

[Nate The Great]

So what % labor do you bid the job at? For instance , if you bid a 300 dollar job and figure 25% labor. You have 75 dollars to keep that on target.
Assuming you have a reasonable production rate established. Say 3 crew hours at 25 per hour.
So two things can happen. You underbid the job,or the production rate of unsupervised employees plummets (human nature).
However if you can take that 75 and basically offer it to your techs Not as a% but rather as hours. "This job should be 3 hours including drive time. If you finish in 2.5 you will be paid for 3. ". I know that can bring up QC issues but it can also get people to hustle a bit. In that scenario they make 12% more. Not to mention any upsell. Your labor stays on target. What I've found is tht production rates skyrocket when the boss is standing there.
If that happens take note of there production rate. Compare it to jobs that you are absent. If there is a drastic difference use that as a motivator " Bob you mentioned that you would like a raise. We'll if you worked at the rate you did today you could average 30 percent more". If a job is rough an they are working hard but still not making high production rates. They can still fall back on there base hourly rate. Even then you can figure out a quick production rate and offer an incentive to cut your losses.
All of this depends on detailed production rates on a lot of surfaces. And quality has to be hammered in again and again.



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Dad, is that you?!?

I always heard pops telling the employees that... It does work when you have "go getters/good crew"...

 

[JS41035]

On a two person crew, what are the ways to split up the commission?
25% to the crew chief minus the tech labor
or
15% to the crew chief and 10% to the tech.
When we do some bigger commercial jobs there's four of us there sometimes, how do you spit that up.
I love the idea of Commission because it would set my labor rate, I just need to figure out how it's going to work for me.

I think a piece rate is different than commission. Here's why.
Commission is a set percentage of the total job amount. I think that's good for up sales. Protectant etc.
A piece rate is a set price based on a preset production rate. To me an ideal production rate is "how fast can I do it?" But as the owner I am gonna hustle and get the job done faster and better than the average employee. So I can't logically expect them to work the way I do.
We learn that actual production rates from real world employees are way less than ideal. To bid a job we have to use the numbers they ACTUALLY do instead of what they are CAPABLE of doing.
That being said if you bid a job at 25% labor using real world production rates that you have documented from watching and tracking your guys. You can use a piece rate, either in the form of a flat hour offer (finish in 2 get paid for 2.5) or a sq ft price. If you have 4 hours bid into a job and you offer a tech 3.5 Hours. He has an opportunity to hustle and finish in 3. Instant 15%raise for him. Your labor number dips below 25%.

As far as paying the helper a %. I say no. Just hourly.



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[idreadnought]

I pay a flat percentage of job total to my techs. It motivates them to work hard and I never hear about how one guy is working harder than another. I pay between 20-25% depending on a few factors. I pay more on certain upsales. It has worked out really well for me. The techs understand that some jobs are more lucrative than others but at the end of the day they are making good money. I have one tech that is a very efficient cleaner and works hard. It is not unusual for him to be home at 4pm having done a full days work with very happy customers. I love to hear this cause he is happy to be done early and im happy I still made mine.

I do have a question though? when you factor labor cost do you figure in the workers comp and associated employer taxes or do you just figure the actual gross you pay the tech?

 

[Royal Man]

Percentage of a set job price is one thing. Another is profit from sales. Don't your techs sell? That can be where the money is that makes a real difference and can pay your techs a higher percentage and you still get a bigger profit to put in your pocket. A percentage with a higher percentage for upsales will motivate your techs to grow the bottom line and not just put in the hours. Also, I was wondering how can you find help that will work for 10% or less? They might as well be flipping burgers at the king.