--- title: Who's Paying For Your Carpenter's Non Productive Time? description: Using the wrong labor cost for a carpenter can be devastating, particularly in jobs where there is a high proportion of labor. image: https://www.shawnmccadden.com/hs-fs/file-15775142-jpg/images/melanie_portrait-wr.jpg --- [![the design builders blog](https://www.shawnmccadden.com/hs-fs/file-1968953853-jpg/images/ShawnMccadden-DBblog-header.jpg "the design builders blog")](https://www.shawnmccadden.com/) [![Subscribe to the Design/Builders Blog](https://no-cache.hubspot.com/cta/default/81069/62868785-47fb-4751-8ade-e9392edbbdd1.png)](https://cta-redirect.hubspot.com/cta/redirect/81069/62868785-47fb-4751-8ade-e9392edbbdd1) # The Design Builder's Blog ## [Who's Paying For Your Carpenter's Non Productive Time?](https://www.shawnmccadden.com/the-design-builders-blog/bid/82538/Who-s-Paying-For-Your-Carpenter-s-Non-Productive-Time) Posted by [Shawn McCadden](https://www.shawnmccadden.com/the-design-builders-blog/author/shawn-mccadden) on Thu, Jan 16,2014 @ 06:00 AM - [Tweet](https://twitter.com/share) ![Melanie Hodgdon, Business Systems Management](https://www.shawnmccadden.com/hs-fs/file-15775142-jpg/images/melanie_portrait-wr.jpg?width=85&height=128&name=melanie_portrait-wr.jpg)     **Guest Blogger:** [Melanie Hodgdon](https://www.shawnmccadden.com/the-design-builders-blog/bid/82538/www.MelanieHodgdon.com) is a Certified QuickBooks ProAdvisor who has been providing financial analysis and QuickBooks training for contractors since 1994. She’s the author of **[*A Simple Guide to Turning a Profit as a Contractor*](%20http://www.moneymazebooks.com/). ** Melanie and Shawn often coordinate their efforts when helping remodelers develop financial systems for their businesses so they serve the contractor, not just their accountant.   ## **Who's Paying For Your Carpenter's Non Productive Time?** ![Non Productive Time for Carpenters](https://www.shawnmccadden.com/hs-fs/file-16121348-jpg/images/scale_with_clock-wr.jpg?width=202&height=115&name=scale_with_clock-wr.jpg)**I was discussing the cost of labor the other day with a client,** and he told me he really had a handle on what his costs were. “No kidding? That’s great,” I said. I then quizzed him on what factors he’d included, and was impressed that he’d gotten so many: **wages; company-paid payroll taxes; Worker’s Comp; liability insurance; vehicles, cell phones, and small tools used by production workers; health insurance; retirement.** “And what about non-productive time?” I asked. Puzzled, he asked me what I meant. The fact is that while **it’s relatively simple to calculate what it costs to pay a production worker for an hour of time**, you have to remember that he’s not going to be available to perform the work that you estimated for 100% of that time.   ### ![Hours for carpenter](https://www.shawnmccadden.com/hs-fs/file-15735436-jpg/images/chart_1-wr.jpg?width=238&height=66&name=chart_1-wr.jpg)**Let’s do the math.** **Assuming no overtime, a worker is typically paid for 8 hours/day, 5 days/week, 52 weeks/year.** This adds up to 2,080 hours. **So you’re paying him for 2,080 hours a year.** But for how many hours will he actually be available to you to perform the work you’ve included in your estimate for labor?  Subtracting for some common events, we see **the number of hours available for producing the estimated work starts to evaporate.** ![Productive hours for a carpenter](https://www.shawnmccadden.com/hs-fs/file-15735593-jpg/images/chart_2-wr.jpg) ![Nonproductive time for carpenter](https://www.shawnmccadden.com/hs-fs/file-291485167-jpg/images/messy_work_van-wr.jpg?width=172&height=129&name=messy_work_van-wr.jpg)     **What else cuts into that productive time?** How about those weekly production meetings? OSHA safety meetings? Meetings about the new health insurance or retirement options? **What about training and education?** How about the requirement that they clean out the vans every Friday afternoon? Do they help clean up the shop? Maintain tools? **Are they paid for commuting time?**   ### **How might this affect estimating the cost of labor for a job?** **Let’s say that you pay Will $20/hr. After adding all the burdens to that hourly rate, you discover that his total annual cost is $63,500.** You can look at this annual total in two ways: how much does Will cost you per *paid hour*, and **how much does Will cost you per *productive hour*:** the hours that he’s actually available to perform those labor tasks you included in the estimate when calculating the job’s sale price? ![Labo burden for a carpenter](https://www.shawnmccadden.com/hs-fs/file-15735844-jpg/images/chart_4-wr.jpg)   **From the chart, you can see it costs over $5/hour *more* for Will’s time when you base the cost on his productive time.**   ### **So what does this mean in terms of pricing jobs?** **Using the wrong labor cost can be devastating,** particularly in jobs where there is a high proportion of labor. Let’s see how it would play out in jobs with varying amount of labor. For a 100 hour job, based on the burdened cost per *paid *hour, the estimated cost would be $3,053. Those same 100 hours, **based on the burdened cost per *productive *hour,** costs $3,553. So the cost difference between using the paid vs. productive hr cost figure would be $500. For a 1,000 hour job, **the cost difference would be $5,000.** ![The cost of non productive time](https://www.shawnmccadden.com/hs-fs/file-15735988-jpg/images/chart_5-wr.jpg)   ### **Now let’s look at the selling price of the job, assuming a 50% markup.** For a 100 hour job, the difference in selling price would be $750. **For a 1,000 hour job, you’d be underpricing by $7,500!** ![Pricing a remodeling project](https://www.shawnmccadden.com/hs-fs/file-15736243-jpg/images/chart_6-wr.jpg)   ![Pay rates for carpenters](https://www.shawnmccadden.com/hs-fs/file-15761238-jpg/images/hammer_and_nails-wr.jpg?width=158&height=126&name=hammer_and_nails-wr.jpg)   **So next time you estimate work, be sure you’re working from realistic costs.** Labor is tricky to estimate anyway; getting a handle on what it really costs for that hour of nail banging will **bring you closer to costing and pricing your jobs accurately.**       ## **Need help with figuring out your labor costs?** **Call or [Email Shawn](mailto:shawn@shawnmccadden.com?subject=Shawn,%20I%20want%20help%20figuring%20out%20my%20true%20labor%20costs) today.  **   ### **Do it now so you can be confident you are pricing your spring and summer projects correctly!**     Topics: [Business Financials](https://www.shawnmccadden.com/the-design-builders-blog/topic/business-financials), [Labor Costs](https://www.shawnmccadden.com/the-design-builders-blog/topic/labor-costs), [Financial Related Topics](https://www.shawnmccadden.com/the-design-builders-blog/topic/financial-related-topics), [Earning More Money](https://www.shawnmccadden.com/the-design-builders-blog/topic/earning-more-money), [Guest Blogs](https://www.shawnmccadden.com/the-design-builders-blog/topic/guest-blogs), [Estimating Considerations](https://www.shawnmccadden.com/the-design-builders-blog/topic/estimating-considerations) ### Subscribe by Email [![please donate](https://no-cache.hubspot.com/cta/default/81069/d6888f7b-f488-4356-88b4-14128c5aab4b.png)](https://cta-redirect.hubspot.com/cta/redirect/81069/d6888f7b-f488-4356-88b4-14128c5aab4b) [![cogs worksheet tool free download](https://no-cache.hubspot.com/cta/default/81069/7baf34b1-cad0-4bdf-84eb-b21dd6da4973.png)](https://cta-redirect.hubspot.com/cta/redirect/81069/7baf34b1-cad0-4bdf-84eb-b21dd6da4973) [![MA CSL Classes](https://no-cache.hubspot.com/cta/default/81069/663d3a42-f898-41b6-850d-dd6c96899668.png)](https://cta-redirect.hubspot.com/cta/redirect/81069/663d3a42-f898-41b6-850d-dd6c96899668) ### Are You Documenting Your Crew's  Compliance With The RRP Rule?  [![download free RRP checklist](https://no-cache.hubspot.com/cta/default/81069/dd6aace9-6cb0-4ad2-a55a-09846d7f5b5e.png)](https://cta-redirect.hubspot.com/cta/redirect/81069/dd6aace9-6cb0-4ad2-a55a-09846d7f5b5e)   ### Frustrated With Your Current Method Of Estimating Projects?   [![free excel estimating template](https://no-cache.hubspot.com/cta/default/81069/14387bf1-ade4-4b88-9c17-1b56a85bab52.png)](https://cta-redirect.hubspot.com/cta/redirect/81069/14387bf1-ade4-4b88-9c17-1b56a85bab52) ## Not Sure Of Your True Labor Costs?  [![New Call-to-action](https://no-cache.hubspot.com/cta/default/81069/390dc019-2e22-41cc-8b47-eeb259f25bf3.png)](https://cta-redirect.hubspot.com/cta/redirect/81069/390dc019-2e22-41cc-8b47-eeb259f25bf3) ### Find what you are looking for - 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