Calculating Labor Costs - Open Discussion

Calculating Labor Costs - Open Discussion

I'm curious how companies calculate their labor costs and how they may be breaking it down.

I've seen companies that have things calculated and broken things down by assemblies (carcass, doors/fronts, drawer boxes, toe kicks, counters, etc.), and others that have broken it down by square footage of material required.

But, what methods were used to calculate those costs? Time studies?  Or, are you just cool enough and efficient enough that your recording and reporting process are accurate enough to calculate that? Is it a combination?

The reason I ask is because this is a question that I've been asked by companies in the past. Especially, when they are looking into using Microvellum (or another software) for estimating. After all, this information is important to get right. If your estimates are off, you could be losing out on work, or losing out on profits.

Let me be clear here. I'm not asking for dollar figures or what your shop labor rates are, or anything else along those lines. I'm simply asking for the methods used to help determine those costs and rates.

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