Question 1

What expenses should I include in my 'Labor Overhead Rate'?

Accepted Answer

Your overhead rate should be a percentage that covers all labor-related costs beyond the hourly wage. Key items to include are: employer portion of FICA taxes (7.65% in the US), federal and state unemployment insurance (FUTA/SUTA), workers' compensation insurance premiums, health insurance contributions, retirement plan matches, and the amortized cost of uniforms and training.

Question 2

How do I calculate my specific overhead rate?

Accepted Answer

Sum up all your annual labor overhead costs (from the list above). Divide this total by your total annual payroll (base wages). The result is your overhead rate. For example, if you have $50,000 in annual overhead and $250,000 in annual wages, your overhead rate is ($50,000 / $250,000) = 0.20, or 20%.

Question 3

Does this planner work for salaried employees?

Accepted Answer

You can adapt it. To use it for salaried employees, first convert their salary to an equivalent hourly rate. For example, a chauffeur earning a $52,000 salary works roughly 2,080 hours per year, making their hourly rate $25 ($52,000 / 2080). You can then input this into the calculator for the relevant period (e.g., 40 hours for a weekly cost).

Question 4

How can I use this tool to manage overtime costs?

Accepted Answer

You can run two different scenarios. First, calculate the cost of your regular staff. Second, create a separate calculation for overtime hours, using the higher overtime pay rate (e.g., 1.5x the hourly rate). This will clearly show you the premium you're paying for overtime and can help you decide if hiring additional part-time staff is more cost-effective.

Question 5

What's the relationship between staffing cost and revenue?

Accepted Answer

For a healthy transportation business, total labor cost (including overhead) should ideally be a specific percentage of your total revenue. This is known as your Labor Cost Percentage. While this tool calculates the absolute cost, you should compare this cost against your revenue from the same period to ensure you are operating efficiently.

Chauffeur Staffing Cost Planner

Results

Understanding Staffing Costs

Frequently Asked Questions

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