We all know that what a technician earns per hour has little relationship to what the true cost to the company is. A tech earning $20 per hour could be costing your company over $50 per hour (see illustration below). Understanding this is important for both the employee and management. For management, these numbers matter when setting prices and making hiring decisions. For individual employees, it is important that they understand that their paycheck is only a part of the true cost of employment.
When you consider all of the taxes and benefits the company provides, the cost for an employee can easily be double his pay per hour. As you can see below, the combination of productivity and benefits can really change what each employee actually costs the company.
Numbers Cruncher makes it easy to include these “hidden” employment cost items in the labor calculation. If you use some other software or a spreadsheet to calculate your actual costs, be sure to take all of these extra factors into account when considering the cost for each employee.
A monthly review of your numbers is critical for maintaining profitable operations. You must compare your real life numbers to your calculations to be sure that you are hitting your profit targets.