Labor Burden Calc Question

[bhpjessi1]

Hello! We are calculating an expensive labor burden rate +$100 so we don't think we calculating it correctly. We followed the Service Titan Knowledge Base article on how to calculate it. 

What is everyone's else burden rate looking like?

What costs did you include (all overhead?)

What hours from a tech's timesheet did you include (did you include Idle?)

Anything helps!

[bhpjessi1]

So for the Service Titan calculation are we adding up all overhead costs and dividing it by the hours to get to a $$? Or do we pick and choose certain overhead costs to add up?

Service Titan calculate is as an hourly dollar figure that gets multiplied times the hours worked on the job. Is it always larger than the hourly wage we pay the tech?

[TimMcGuire · Accepted solution]

Yes, the burdened labor rate would be higher than the actual hourly amount you pay the tech. As Bill said, the burden rate takes into account the hourly rate PLUS the additional costs of employing the tech (Payroll taxes, benefits, etc). 

The purpose of using a burdened rate is to allow you to see job costing more accurately than just using the tech's hourly rate. 

[wpowers11]

Labor costs are classified into distinct groups: direct and indirect costs. Direct costs refer to the wages paid to an employee, but the indirect costs encompass but are not limited to:

• Payroll taxes
• Mandatory Benefits such as Health 
• SSA Company cost
• Optional Benefits such as vacations
• Communication costs
• Car Insurances
• Training
• Dental Insurance 
• 401K/ Pension
• Vacation Time

Idle time is included in direct cost as it is an hourly rate you pay directly to the employee. Most look at idle exactly like they look at what they pay someone to be on call which again is a direct cost.