# how much do you make off employees?



## Steve'sSon (Aug 16, 2014)

What do you guys charge your customers for your employee's labor?
How much do you pay your employee?

How much is the overhead on having the employee? (SS match, comp, etc.)

How much do you profit from the employee? (per hour is what I'm specifically looking for.)


*--Above is the question for the forum. Below the explanation as to why I'm asking--*

I'm currently paid 37.5% per hour of what is billed to the customer ($40 billed, $15 paid to me). 
However - the $25/62.5% of the money the business keeps doesn't have much profit after all the overhead expenses. I believe it is less than $10 per hour but I don't know for sure. 

I'd like to be making at least $20 per hour and am planning on taking on a much more involved role in the business. 

If the same ratio applies the company would have to be making between $54 and $55 per hour for this to be possible. 

I'm wanting to compare this ratio to other companies and determine if this is about normal, high or low and make adjustments as needed. 

Also ... has anyone ever done or experimented with commission based payment plan in construction? 
I'd be willing to go solo within the company - marketing, bidding, completing and billing jobs on my own and receiving a set percentage of profit.

I'm trying to find something that works better for both me and my dad/employer.


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## Warren (Feb 19, 2005)

Sounds like dads overhead may be a bit on the high side. I can make decent money using those numbers. I have stated here before that my employee "burden" is equal to about 30% per employee. This covers WC, Fed and state unemployment, FICA, payroll expenses, GL, tools, repairs, mileage.


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## Jaws (Dec 20, 2010)

Does your dad mark up the whole job, materials and labor above that rate? If not, and hes a GC, its gonna be hard to pay all the overhead off of your hands labor rate if it is T and M work at those numbers. 

The rate I figure my guys at when bidding a job , I expect to pay their wages and employee burden, including WC, and the trucks and their overhead, tools ect and make a modest profit. My mark up on the whole job pays company overhead and profit.


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## muskoka guy (Nov 16, 2013)

I would agree that you have to account 25 to 30 percent extra on top of what you pay the employee for comp and taxes. This does not account for liability insurance, phone bills, office expenses, tools and depreciation, vehicles and equipment, and just plain sticking your neck out. If your dad is teaching you the business and paying you decent, hang in there and learn from him. Some day he will hand the business over to you. It takes years to establish a good business. People underestimate how hard it can be to create a successful company. I have seen many people have 25 year business' handing to them only to run them into the ground and close shop. I wish my dad had given me a business. Would have saved me years of hardship. It also would have been nice to be able to call someone and get advice from a senior tradesman whenever I got in over my head. Hang in there and don't get to impatient to leap ahead. Everyone thinks the boss is making money hand over fist, but usually this isn't the case. Most make a good wage and a small profit margin which they totally deserve.


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## Tinstaafl (Jan 6, 2008)

General rule of thumb is that the boss should be able to bill three times your pay/hour for it to be a viable setup. Going by that, he's actually overpaying you a tad.

Most GCs will cut you in for a bit more if you bring them a good lead, more yet if you sell the job. Have a talk with Dad about that. :thumbsup:


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## Metro M & L (Jun 3, 2009)

Im pretty impressed by a guy who looks at the numbers and ratios. Asking hiw much you have to make the company to make what you want to make is way beyond the maturity of most people. 

Youll own your own company as soon as you're no longer steves son and start being your own man. 

I think a lot of men dont get away from whats expected of them, living in their fathers shadow, and start doing what they want until 28 30.


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## Spencer (Jul 6, 2005)

Good thread. Not only for the good information regarding employees but I also for the fact that I still don't think I'm charging enough for my own time....


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## WBailey1041 (Jan 31, 2014)

In the past I have paid guys commission. Here are the basics of my setup.

Find and train a two man crew to do nothing but service work. In my case this means cleaning gutters.

Pay them well and make them fast, efficient and clean. 

Once they are completing 8-10 jobs a day put the lead guy on commission for sales. I do this one item at a time. If the guy wants to learn roofing I teach him how to replace shingles, flashings and other minor repairs that can be performed on the spot with minimal tools and materials. This works well because the lead guy now has incentive to make his helper faster and more efficient.

Typical up sell starts with ringing the bell and introducing himself and his helper, explaining our cleaning procedure and finally telling the customer that he will keep an eye out for any areas of concern. Customer already has an appointment and we call when in route so this is cake. The lead guy gets on the roof with his smart phone and takes pictures of 3 cracked ridge cap shingles. He finishes the cleaning, collects from the customer and offers to either send the pictures and an estimate via email or do it right then. Our minimum for small up sell repairs is 99 bucks if still on site or 149 if we have to drive back out later. 

If the customer says yes the lead guy does the job and makes a percentage of the profit. Think 10-15%. Now this employee is making 15 bucks an hour and quickly realizes he can double that if he learns to sell. This is a huge motivator and now the crew is cleaning gutters twice as fast to make time for repairs. The key to making it work is quality control. The profits look small per job but another 80 bucks profit per sale is significant. If the crew can find issues with 3 roofs a day, with a 99 minimum charge the money is worth the commission.

I'd suggest finding a way to increase sales or profitability in a way that doesn't require your fathers supervision. But keep him in the loop and don't eat into his set schedule doing it.


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## Steve'sSon (Aug 16, 2014)

Warren said:


> Sounds like dads overhead may be a bit on the high side. I can make decent money using those numbers. I have stated here before that my employee "burden" is equal to about 30% per employee. This covers WC, Fed and state unemployment, FICA, payroll expenses, GL, tools, repairs, mileage.


The other day I ran the option of trying to get more flooring jobs lined up because if we charged per square foot we'd make more per hour than currently. 
His first response wasn't about the pay increase but about how much that would save him on workman's comp if the majority of our invoices were for jobs like that. 

So decreasing overhead is definitely something I think is on his mind. 

If I understand you correctly - you're saying 30% of what you charge your customer covers the overhead of the individual employee. If the numbers in my OP were applied to that standard that would mean the company would profit in the area of 30% of my billed labor if we accomplished that?

(37.5% to paid to me, 30% paid to overhead, 32.5% in profit) did I read it correctly?



Jaws said:


> Does your dad mark up the whole job, materials and labor above that rate? If not, and hes a GC, its gonna be hard to pay all the overhead off of your hands labor rate if it is T and M work at those numbers.
> 
> The rate I figure my guys at when bidding a job , I expect to pay their wages and employee burden, including WC, and the trucks and their overhead, tools ect and make a modest profit. My mark up on the whole job pays company overhead and profit.


If we're general contracting a job (looking after and scheduling subs) we do. I think we charge around 10-15% of the total job. 
But on a lot of smaller remodels he doesn't, even though we still line up the electricians, plumber, hvac, etc. 
I think we should.

I also think we should do more work on flat rate measures such as square feet. 
The going rate for installing laminate flooring is $2 per sqft I believe. At that rate yesterday I personally ran enough flooring to make the company $47.5 per hour instead of the billed $40 and I could have ran it faster with a shear and few other tools we're going to invest in. 



muskoka guy said:


> I would agree that you have to account 25 to 30 percent extra on top of what you pay the employee for comp and taxes. This does not account for liability insurance, phone bills, office expenses, tools and depreciation, vehicles and equipment, and just plain sticking your neck out. If your dad is teaching you the business and paying you decent, hang in there and learn from him. Some day he will hand the business over to you. It takes years to establish a good business. People underestimate how hard it can be to create a successful company. I have seen many people have 25 year business' handing to them only to run them into the ground and close shop. I wish my dad had given me a business. Would have saved me years of hardship. It also would have been nice to be able to call someone and get advice from a senior tradesman whenever I got in over my head. Hang in there and don't get to impatient to leap ahead. Everyone thinks the boss is making money hand over fist, but usually this isn't the case. Most make a good wage and a small profit margin which they totally deserve.


I hope I didn't lead you to think I felt my dad was raking in tons of money off me. 
Thats actually something I'm trying to address. My dad would like to retire and have a big garden and farm while he is still in shape to do it and instead works his butt off to stay afloat. 
I WISH my dad we're making lots. From what I can tell the first step is addressing the overhead and getting it down so the company can profit more from my labor. 

Thanks for everything you said. I've worked with him since I was 12 years old and my whole life I've admired his work ethic and all the BS and unpaid hours he has to go through to run the company and the investment he has placed in me. 
I was a challenged kid - this trade has given me opportunities I'll always be grateful for. 

I'm definitely sticking with my dad till he ready to retire. Last week I was offered a job with insurance, 3 days off per week, retirement benefits, etc. and making $45,000 a year and a chance to work my way up from there.
I turned it down. 

I'm not just out for myself. I'm trying to look out for my entire family, including my parents. 



Tinstaafl said:


> General rule of thumb is that the boss should be able to bill three times your pay/hour for it to be a viable setup. Going by that, he's actually overpaying you a tad.
> 
> Most GCs will cut you in for a bit more if you bring them a good lead, more yet if you sell the job. Have a talk with Dad about that. :thumbsup:


Thanks.



Metro M & L said:


> Im pretty impressed by a guy who looks at the numbers and ratios. Asking hiw much you have to make the company to make what you want to make is way beyond the maturity of most people.
> 
> Youll own your own company as soon as you're no longer steves son and start being your own man.
> 
> I think a lot of men dont get away from whats expected of them, living in their fathers shadow, and start doing what they want until 28 30.


Thanks for the compliment. 
Right now I'm trying to find a way to be more of Steve's partner in business and become a huge asset to the company I'll run some day.



Spencer said:


> Good thread. Not only for the good information regarding employees but I also for the fact that I still don't think I'm charging enough for my own time....


What are you charging and what is your overhead if you don't mind my asking?


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## Spencer (Jul 6, 2005)

Travis, we don't use numbers on this site. At least in the open forum. Pm me if you want to talk further but what it really comes down to is everyone has their own numbers. You could live across the road from me and do the exact same work but have completely different numbers. Numbers are things we have to work out for ourselves.


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## Inner10 (Mar 12, 2009)

Getting paid 15 and billed out at 40 sounds pretty normal.


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## jb4211 (Jul 13, 2010)

Subscribed


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## huggytree (Nov 3, 2013)

i pay $15-17 for my part time helpers.....i bill out $50 if he's able to work by himself and $25 if he's just standing there carrying tools/parts


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## sapple89 (Sep 20, 2013)

If you have 15 years of experience and only make $15, you need a new employer.


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## jlsconstruction (Apr 26, 2011)

sapple89 said:


> If you have 15 years of experience and only make $15, you need a new employer.


I've employed guys that have $20 years experience that aren't worth $8


There is way to many things to consider.


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## Ceezz (Jan 6, 2013)

Spencer said:


> Good thread. Not only for the good information regarding employees but I also for the fact that I still don't think I'm charging enough for my own time....


Same I gotta get tougher


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## Driftweed (Nov 7, 2012)

sapple89 said:


> If you have 15 years of experience and only make $15, you need a new employer.


Not necessarily. Steve is from my town and $15/hr is decent money as an employee. 

As someone else said, generally triple your highest hourly employee payrate.

I personally have 2 pay scales for the 2 services I provide. We paint rentals and stay away from high end repaints. I establish my company not as your regular apartment painters, but quality apartment painters. SO my clientelle are those who have been burned by the low-ballers and change order masters. They want no hassle pricing and no callbacks, which is exactly what I provide, and charge accordingly for.

On the painting side when I bid out an apartment complex I look at by hourly rate of 2 guys at $50/hr each and how long it should take to do the job. Example 8 hrs = $800 I generally make sure that no matter what, we can get a unit done in a days time as long as there is no drywall work/excessive prep.

I pay my painters $10/hr which is fair for area and skill level required. But if they prove to be an asset I will be willing to go as high as $15. This leaves wiggle room in the bid to still make money even if they stretch the job out to 12 hours.

Now, I have also just started my other service of bathtub reglazing. So far I have invested over $5k to get this going in buying equipment, etc...

For that I charge a minimum of $400 and pay the employee piecemeal of $100 per tub. Of course the price and pay go up if add ons like the surround, countertops. This is a 3 hour service, and once I get an employee rolling full time he can knock out 3 a day, 2 minimum. He will make minimum of $200/day (on payroll with a W2). 

I will begin in september getting advertising going full steam on the bathtub side so I can transfer my new trainee from part time to full time by next year. (yes, he is willing to stay part time until it gets going)

That's how I do it steve for our area.


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## CarpenterSFO (Dec 12, 2012)

One of the common ways to become an asset to the family business is to get out in the world, work for some other folks and learn some things, and bring that expertise back to the family business after a while. That's just an observation, not a recommendation.

At 27 (did you mention your age) you should get your dad to open the books to you, else you really can't help on that front. If he won't, just get up and go work for someone else.

Easy for me to say, it's not my family.


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## JBM (Mar 31, 2011)

Sometimes you can put your detective hat on and figure out what is typically done. 

Bring your truck to a local mechanic, mine says "labor rate is 80 an hour"

Sounds like he has $25 hour mechanics that he bills x3 @. 

Get a bill from your attorney, para fees @ 65 an hour (was a long while ago now), attorney fees @ 200 an hour

For example. 

Why would we not bill our help @ x3?

My tattoo guy charged me 150 an hour a while ago. He might be 200 now. 

If you dont price high there is little room to dig in and make it as perfect as possible.


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## Tom M (Jan 3, 2007)

My accountant always advised to figuire 30/30
ex. 20 hr / .70 = 28.57 (burden) 28.57 /.70 = $40.82 billable


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