Ideal percentage labour costs

[Dean O]

has anyone recently worked out their labour cost as a percentage against their total running costs?

 

and does anyone know whether there is an 'ideal' - either in this industry or in business as a whole?

 

should say to make clear I'm not after exact figures - just a percentage of total business costs.

 

Im running at 37% - which seems a little high as I've had a lot of equipment expenditure over the last year - which has pushed my total costs up.

 

Thanks

Dean

[richy_B]

I doubt there is an ideal as every business varies. The difficult item to factor to in is you - do you take a full salary, Salary to the income tax threshold, dividends, etc. The larger your organisation the less important the accuracy of this but if you are a 3 man set up it will clearly have a big impact.

[Dean O]

no - my salary is a fixed cost, whereas dividends are quite dependant on the level of profit the company makes.

 

I'm conscious that I don't want to get into discussing profit percentages - as I feel this might be personal to people who may otherwise contribute to the thread regarding costing's.

 

different business's will vary - if I was a sole individual carrying out consultancy I would expect my costs to be much lower (less equipment to by, maintain, fewer staff etc.) - but my wage may remain the same so would hope to have a healthy salary v total cost %.

 

I believe the restaurant industry aims for a salary: total business costs of around 30%.

 

maybe it would be a better gauge to measure salary% to business income or profit? but was hoping that some out there may have made the same sort of analysis of their own business at some point.

[Richard 1234]

no - my salary is a fixed cost, whereas dividends are quite dependant on the level of profit the company makes.

 

 

 

I'm conscious that I don't want to get into discussing profit percentages - as I feel this might be personal to people who may otherwise contribute to the thread regarding costing's.

 

 

 

different business's will vary - if I was a sole individual carrying out consultancy I would expect my costs to be much lower (less equipment to by, maintain, fewer staff etc.) - but my wage may remain the same so would hope to have a healthy salary v total cost %.

 

 

 

I believe the restaurant industry aims for a salary: total business costs of around 30%.

 

 

 

maybe it would be a better gauge to measure salary% to business income or profit? but was hoping that some out there may have made the same sort of analysis of their own business at some point.

 

 

I used to manage a pub with my ex.

Wage percentage had to average over the year to 21%(not including managers wage) that was for a brewery owned pub.

Food was sold at 3.5 times cost.

[Dean O]

was that 21% of revenue or 21% of costs, thanks

[Richard 1234]

was that 21% of revenue or 21% of costs, thanks

 

 

Revenue. It was bloody awkward as you were essentially having to guess how busy you were going to be a month in advance.

Some weeks you would blow it by 10% but others it was down at 15%.

And they also used to change allowance as it pleased them!

But it averaged at 21% normally

[Dean O]

calculating against my revenue it doesn't look that much better for me - around 36% as I blew loads o money on kit that year which skews things

[Big J]

I would say that I'm somewhere around 10-15% of revenue, depending on month. I'm a sawmill though, so different breakdown I imagine. I also have a lot of timber to buy and very high overheads on premises/equipment.

[Richard 1234]

I would say that I'm somewhere around 10-15% of revenue, depending on month. I'm a sawmill though, so different breakdown I imagine. I also have a lot of timber to buy and very high overheads on premises/equipment.

 

 

Presumably with your new mill you are making saving on staff costs?

Therefore moving the expense to machines not men.

[Big J]

Presumably with your new mill you are making saving on staff costs?

Therefore moving the expense to machines not men.

 

Huge saving. About £280 a week if I'm on full production (what would have been 5 days on the Logmaster is condensed into 2 and a half). Probably averages out at about £180 a week saved.

 

Any savings I make just goes into new equipment. There is no limit to useful equipment in a sawmill!