How do I price jobs when I have employees?

Wage is not the full labor cost

Depending on your business and location, employee cost can include employer payroll taxes, workers' compensation, benefits, paid time off, training, uniforms and other employment expenses. Work with your payroll or accounting professional for the costs that apply to you.

Not every paid hour is customer-producing

Employees may spend paid time loading, traveling, cleaning, training, attending meetings, waiting on materials or performing callbacks. Your estimates should reflect realistic productive hours rather than assuming every payroll hour is billable.

Separate cost from selling price

A labor rate that merely reimburses payroll leaves nothing to support the rest of the company.

Estimate crew hours carefully

For a two-person crew working four hours, the job consumes eight labor-hours, not four. Also consider whether a working owner is part of the crew and whether their time has been priced consistently.

Compare estimate with actual payroll hours

Track how many labor-hours completed jobs actually used. Repeated overruns may indicate estimating problems, training needs, scope creep or prices that need adjustment.