Ever wondered about your true labor burden costs? Labor burden is more than just an employee's salary. It includes all the additional expenses that a company incurs for having an employee on their payroll. These expenses encompass benefits like payroll taxes, pension contributions, health insurance, dental insurance, and any other perks provided by the company.
But that's not all. Paid time off, such as sick leave, holidays, and training time, also contributes to the labor burden. It's important to consider these costs because they are directly related to employment and can significantly impact a company's bottom line.
Unfortunately, many businesses make the mistake of only focusing on payroll and payroll taxes, neglecting the bigger picture. They fail to recognize the full cost required to enable an employee to perform their job effectively.
To accurately calculate labor burden costs, it's crucial to spread out the overhead expenses across all income-generating employees based on their hours worked. For example, a part-time employee working 20 hours a week will absorb only half as much overhead as a full-time employee working 40 hours a week.
To estimate the total yearly cost spent on an employee, you can express the fully-burdened costs as a yearly total. Alternatively, you can divide the total yearly cost by the number of hours the employee will work to determine the hourly cost. This cost is often 50% to 150% higher than the employee's gross hourly wage.
Understanding the true cost of an employee is essential, as these costs often form the basis for pricing services or products. By gaining an in-depth understanding of labor burden costs, you can make informed decisions and ensure your business remains financially viable.
If you have any questions or need further clarification, feel free to reach out. It's important to have a clear understanding of your labor burden costs to effectively manage your business.
I have an important question for you. Do you know your true labor burden cost? If your answer to this question is no, it's possible that you're missing out on a significant amount of money.
I wanted to reach out to you because I believe there may be an opportunity for us to help you increase your revenue. We have come across a solution that has proven to be highly effective for businesses like yours. By implementing this solution, you could potentially see a substantial boost in your profits.
Many of our customers started out as field technicians who made the life changing decision to start their own contracting company. Starting a business for the first time is not an easy task. You have to make the commitment to become a business person.
TurboBid is rated the #1 estimating software solution because we include the tools that are needed to help you run your contracting business the right way.
TurboBid’s "Wizards” present you with a sequence of steps that lead you through the process of identifying and accounting for the costs associated with labor burden costs, your company overhead costs, and setting up your copy of TurboBid.
What's important to understand that these costs are in a state of continual flux and need to be updated regularly. By simply updating the wizards, your estimates will always be accurate.
We've got an incredible tool that will make calculating your employee's burden costs a breeze. Introducing the Burden Wizard! This wizard will guide you through each step, ensuring accurate calculations every time.
And the best part? Whenever costs change, simply update the values in the wizard and your estimates will automatically adjust accordingly.
To get a better idea of how it works, check out this video showcasing TurboBid's Burden Wizard. Just hit the Play button and start exploring by clicking on the red outlined buttons or symbols.