Since improper labor pricing is the single biggest reason why companies go out of business today, proper labor pricing should be your No. 1 priority.
Our objective over the past several months has been to help you through the process of determining what hourly rate you need to charge to cover your cost of doing business while generating the profit you desire. We started four months ago by talking about equipment replacement costs. Next we discussed field labor and how to determine our cost of nonbillable time. Two months ago, we discussed materials and their respective markups and last month we covered company matching taxes. If you have not read the first four articles and filled out the worksheets, I would strongly suggest you do that before reading this article as each is a piece of the puzzle. Without all the pieces, the process doesn't make much sense and you will not develop the correct hourly rate for your company.