Calculations are based on the "average labor cost" to calculate overall GP, labor GP %, and GP/BH.
To enter Average Labor Cost, go to Shop Settings → RO Info and scroll down to Average Labor Cost:
This value is determined per billed hour. That is, given one billed hour, how much does your labor cost, on average?
Techs paid on Flat Rate Only
For shops that pay technicians on "flat rate", average labor cost is the average of your technicians' pay. Say, for example, you have four technicians:
Mark = $35 per billed hour
George = $32.50 per billed hour
Jason = $22.25 per billed hour
Lisa = $31.00 per billed hour
35 + 32.50 + 22.25 +31 = 120.75
Average Flat Rate wage = 120.75/4 = 30.19
Thus the "average labor cost" (wage you pay to a tech), per billed hour = $30.19
Techs paid Hourly (or a blended comp)
If your techs are simply paid hourly (time on premises) or a combination of hourly wage and commission, then their cost varies depending on their productivity. This is more complicated to predict in advance, especially if you don't yet know who is going to do the work OR they haven't completed it yet. (This is why an average labor cost is much easier to enter and manage.)
Look up your labor expense for a given time period, such as the last month (or a month you feel is typical). Include benefits and taxes if you wish (if you want to factor that cost into your GP as well). Then look up the total billed hours for the same period. For example:
Total Technician wages, October: $18,606
Total Billed Hours, October: 431
Average Labor Cost = $18606/431 = $43.17
Regardless of how to arrive at the number, we'll use the number to determine labor GP on given services and ROs, as a function of billed hours on the service or RO. This is also the number used to calculate roll up GP numbers on the Invoices page.