Labor types

Why use labor types

A labor type defines a labor rate. You can link items with labor costs to a labor type. Imagine if you had 10,000 items with 10 different labor rates. Then imagine that the next year that you give all your workers a raise… How do you update that labor cost? You use labor rates and you can do it in less than a minute.

How they work

All labor items that are marked as having a labor cost component, must have a labor type associated with it. The item uses the labor rate defined in the labor type in addition to the hours/time per unit to determine the labor cost component of the item.

So, let’s say your average labor rate for a team of carpenters is $50 per hour. Let’s also say you have an item called wall framing measured by the linear length in feet, and you created an item that calculated that the time per unit are 5 min per foot to complete (or 0.083 hours per foot).

In that scenario, we can see that the labor cost calculates to $4.15/ft. Later your labor rate might change, for example maybe the following year you expect to pay $55/h for your carpenters. All you would need to do is change the labor rate in your labor rates page to $55 and any item that is added to an estimate will be loaded with the new labor rate. The hours/time to complete never changes, so you only need to worry about changing the rate. This is how it would look the following year:

Your item just went up in cost. In addition to the increase in cost, CostCertified will also keep your item margin according to the settings on the item, or the default as set on the company level. That means that the price will also increase (so you don’t start losing money!). So let’s say your default markup is 1.5x, then from year 1 to year 2, your price on that item (what you would charge your customer) would increase from $6.23/ft to $6.86/ft.