Now you know what it's costing your company for the
service department's free ride. After determining the service department's share of applied
hard cost, the next step is to conduct a cost impact analysis when we add the cost of three technicians. Calculating cost impact analysis in Steps 8-12 will guide you through the process of determining a fair market hourly labor rate.
Step 8 Transfer from Step 7 the department's share of applied
hard cost: Step 9
Enter your shop's current hourly labor rate: $75,655 $70
At current hourly labor rate, how many hours must be billed to customers to pay the service department's share of applied hard cost?
1,080 hours
Math: Enter into your calculator the department's applied hard cost and divide by the hourly labor rate. Numbers of hours will be revealed.
Quick study questions: Can one technician working full time produce revenue
sufficient to pay a shop's share of applied hard cost? (Yes or No)
If not, how many technicians would it require?
________ ________
Yes
In article five in this series, we will share formulas and charts for measuring technician efficiencies and determining how to establish a fair market hourly labor rate. As always, the numbers will reveal the truth and show us the path.
OPE
Jim Yount is the founder and chief executive officer of Jim Yount Success Dynamics LLC. For more than 30 years, he has hired, trained, managed, sold, marketed, and motivated. Extensive real- world experience in retailing, distribution and working with manufacturers, both domestic and international, has earned Jim the reputation as a
trustworthy and knowledgeable professional in his field. As a results- oriented speaker, he is dedicated to inspiring groups of 30 to 3,000 to develop their talents and realize their full potential. As a business consultant, teacher and coach, Jim is experienced at challenging leaders to explore their operational procedures and change unacceptable practices that are producing poor results. For more information, contact Jim at jimyount@hughes.net or (903) 796-3094 or visit his website at www.jimyountsuccessdynamics.com.
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