Shop Management
Effective labor rate: what each billed hour actually earned
Kace BurnetteSeptember 4, 20266 min read
Effective labor rate shows what each billed hour actually earned after the real selling behavior of the shop is taken into account. It is not the posted door rate, and it is not the number on the wall.
Effective labor rate = labor sales ÷ billed labor hours
If labor sales are $4,800 across 40 billed hours, the ELR is $120. That is the number management actually needs to understand.
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