Computing your true cost of labor per individual employee is one of the most profit-enhancing and cost-saving analyses you can make for your company. A labor-burden analysis will provide you with the decision-making information you need to make the most accurate job cost estimates and pricing decisions. It's one of the best tools you can use to help finish jobs on time and within budget.
Who are the people that charge the “Going rate”? Who are the people that say “I can’t charge higher than my competition, I’d be out of business if I did!” What type of business owner say’s, “I will undercut all of my competitors”? I hope it’s not YOU! Business owners who want to stay in business will never say those things. What they will say is, “We charge our customers by the job, not by the hour”. They turn around questions from customers that state they cost too much. They build relationships with them, show professionalism, trust and honesty. Smart business owners don’t compete with their competition. They bid jobs smart! They bid out jobs in order to stay in business. They have to charge a certain hourly rate. They aren’t your fly by night companies who are in business for only a few short years, then disappear under the radar. They also don’t show up in dirty clothing, smoke cigarettes and have poor hygiene.
Out of 1000 people surveyed, 70% of paying customers prefers a person to wear booties, smell good, and be clean cut. Another survey of 1000 people says that 66% of people will comment negatively online about the service that they received! AND, 69% of people surveyed said they are more likely to tell other people about the bad service than the good service they got. Take a look around at the businesses that have been around for 30+ years. Look at their operation. Did they charge the going rate? Did they undercut their competitors? No, they didn’t. 64% of people who were surveyed will choose a higher price over an undercut price from an unprofessional company. Customers will pay for quality service! Anybody can do the physical labor. You're out there to sell your company to the customer.
Let's be realistic here. If you have more money going out the door than what is coming in, what needs to happen here? It’s not rocket science. You have to charge more and do it smart. So the easiest way to figure this out is to listen to old school successful business owners who have been there and done that. If you're not familiar with SCORE and your local chamber of commerce, your missing out. You can also go to https://www.score.org/ and get more information there.
You can also check out the Profit Generator app here on our website https://thelpsolution.com/profit_generator. I have talked about this in other blogs. It’s the best tool for figuring out your hourly rate. Don’t step over a dollar to pick up a dime. I did work for Dr Drucker a while ago. I love one of his quotes which is on my website. “Wherever you see a successful business, someone once made a courageous decision.” The Profit Generator app is a well thought out, personally used, business app for the service industry. If you provide a service for a customer, this is the app that will keep your company in check every month. There are videos to watch that explain everything you need to know about the Profit Generator.