Setting Up Labor Rates in shopVOX: A Simple Guide
Updated
by Tyler MacDonald
In the shopVOX pricing engine, three crucial components form the backbone of accurate and effective pricing: Materials, Machine Rates, and Labor Rates. This article will focus on guiding you through the process of setting up a Labor Rate, using a straightforward example for clarity.
Understanding Labor Rates with an Example
Imagine you have a professional installer working on a car wrap project. For simplicity, let's say you charge your customer $100 per hour for this service, and the installer can complete 100 square feet of wrapping per hour. These specific figures are chosen to illustrate the concept clearly; in practice, your rates and installation speeds will vary.
How to determine Labor Rate
- Determine the Hourly Rate: First, identify the hourly labor rate you wish to charge. In this example, it's $100 per hour. This rate should cover the installer’s wages, overhead costs, and desired profit margin.
- Estimate Productivity: Next, estimate how much work the installer can complete in an hour. Here, it's 100 square feet per hour. Accurate productivity estimates ensure that you’re not undercharging or overcharging your customers.
- Calculate the Labor Rate Per Square Foot: To find out how much to charge per square foot of installation, divide the hourly rate by the productivity rate. In this example, $100 per hour divided by 100 square feet per hour equals $1 per square foot.
Applying These Principles
Once you understand these basic principles, you can adapt them to any labor task within your shopVOX system. Whether it’s installing car wraps, applying decals, or any other service, the key is to accurately calculate both your hourly labor rates and productivity rates.
Real-World Application
In real-world scenarios, your numbers will differ. The installer might work faster or slower, and your hourly rates might be higher or lower based on various factors such as location, experience, and market demand. The beauty of shopVOX’s flexible system is that it allows you to customize these rates to fit your specific needs and circumstances.
Why Simple Examples Matter
Starting with simple, mathematically straightforward examples is a best practice to avoid confusion. By using easy-to-follow numbers, you can focus on learning the mechanics of setting up machine rates without getting bogged down by complex calculations.
Step-by-Step Guide
To set up an example machine rate.
- Go to settings.
- From the sidebar locate Pricing and choose "Labor Rates"
- Choose "+ Add New Labor Rate"
- Fill in the relevant information for the Installation Car Wrap Example
- Name: The name associated with this labor rate. For this example, we will use "Installation Car Wrap Example."
- Cost: The expense incurred by the business to cover the person per unit time or unit production: This includes wages, benefits, and any other operational costs associated with the installer. Example: $50/hour.
- Price: The amount charged to the customer for the labor service. This is usually calculated based on the cost with an added profit margin. Example: $100/hour.
- Markup: The percentage increase from the cost to the price. It represents the profit margin on the labor service. Example: A 100% markup means if the cost is $50, the price will be $100.
- Units: The measurement used to define the labor's production output. This helps to quantify the installer’s work rate. Example: Hours.( Select Show All Fields to see this value )
- Setup Charge: A one-time fee associated with preparing for the job. This covers the time and resources needed to prepare for the labor task. Example: $0 per job.
- Labor Charge: The cost associated with the human labor required to perform the job. This can be a separate charge if additional labor is needed beyond the primary service. Example: $0 per job.
- Other Charge: Any additional charges that may apply. This could include fees for special handling, overtime, or any extra resources needed. Example: $0 per job.
- Formula: The mathematical equation used to calculate the total cost or price based on various inputs like time, material usage, and production rate. Example: Total Cost = (Cost per Hour * Production Time) + Setup Charge + Other Charges.
- Production Rate: The speed at which the labor can complete the desired output. This is typically measured in units per hour. Example: 100 square feet per hour.
- Units: The units defined by your Production Rate. Example: Square Feet
- Per: The basis for the rate, typically per hour or per unit produced: Example: Per hour.
- When complete select "Add New Labor Rate"
Using this example, you can configure a labor rate for car wrap installation in shopVOX. The key is to accurately determine the cost, price, and production rate to ensure fair and profitable pricing. Once you grasp these fundamentals, you can apply them to various labor tasks within your shopVOX system, ensuring comprehensive and precise pricing for all your services.
Utilizing the "Installation Car Wrap Example" Labor rate in a Product
Lets setup a very basic product, to see how our new labor rate performs.
- Got to Settings
- From the side bar select "Products"
- Lets click "+Add New Product"
- Select "Create a custom Product"
- Fill in the details. I am using example information, feel free to use your own
- Turn on "Add Product template"
- Under Modifiers select "+ Add Modifier"
- Add in the Width Modifier
- Add in the Height Modifier
- Under Default items lets select "+ Add Default Item"
- For Item Type: Choose "Labor Rate"
- For Machine Rate: Choose "Installation Car Wrap Example"
- Fill in all other details and click "Add New Default Item"
- Go to Check Pricing at the top of your screen
- Enter in some example data. I will enter in 120"w x 120"h for easy to read numbers
- Select the "Pricing Breakdown" to view the Bill of Materials. Here, you will see the "Installation Car Wrap Example" listed as 1 hour. This is because the production rate is 100 square feet per hour, and we have specified 100 square feet for the area measurements.
Configuring labor rates in shopVOX is essential for accurate pricing and profitability. By following the straightforward example and detailed steps provided, you can confidently set up labor rates that reflect true costs and deliver fair pricing to your customers. Once you grasp these fundamentals, you can adapt them to various labor tasks within your shopVOX system, ensuring comprehensive and precise pricing for all your services. For further assistance, the shopVOX help center and customer service team are always ready to help. Happy pricing!
