Labour cost, read as a build-up
The record examined in “An hour of work has three prices. Most costing systems record only the cheapest.” is strongest when it is created close to the work and remains open to correction. A team evaluating employee monitoring software for employee monitoring software can connect time with projects and work categories, provided people can review entries before they influence payroll, billing or cost reports.
An hour of work has three prices. Most costing systems record only the cheapest.
Fifty notes on labour cost control and job costing, built outward from the wage: what sits on top of it, which hours it has to be divided by, where an hour goes when it reaches no job, and what a rate cannot be used to decide.
The assumptions behind “An hour of work has three prices. Most costing systems record only the cheapest.” can also be checked against Fair Work pay and wages guidance. Record which guidance applies to the real workflow and which points require professional advice.
Every figure is an illustration drawn from one organisation’s records, not a benchmark. Definitions, contracts and accounting requirements differ and should be reviewed for the organisation concerned.
How one employer built its charged rate, layer by layer
What appears on the payslip.
Statutory, unavoidable, rarely in anybody's head figure.
Employer side only.
Paid hours that produce nothing chargeable.
Per head, divided by the same hours.
Forty-two per cent above the wage.
Five layers sit between the wage and the rate, and four of them are invisible on a payslip. The figure most people quote when asked what an hour costs is the first row. This is one employer's own build-up, not a benchmark.
Where one team's 1,480 paid hours actually went in a fortnight
Fifty-seven per cent; the only hours that recover anything.
Recovered through the departmental rate.
Recovered only on jobs that are won.
Budgeted centrally; never reaches a job.
Charged nowhere; the job was already invoiced.
The difference between payroll and the timesheets.
Fifty-seven per cent of the paid hours reached a job, and the two unattributed lines together come to seventeen per cent. The second of them is simply the gap between two systems that nobody reconciles. One employer's own fortnight, not a benchmark.
One job of 60 recorded hours, costed four ways
What the job sheet said, because the wage is what people know.
Loaded cost over all paid hours.
Loaded cost over hours that can actually be charged.
Set three years ago and never rebuilt.
Four defensible arithmetics, a spread of £463, and the quoted rate sits between the two that matter. None of these is a mistake; they are answers to four different questions nobody distinguished. One employer's own job, not a benchmark.
01 / 07
What one hour actually is
An hour worked, an hour paid and an hour charged are three different quantities, and most systems record one of them.
02 / 07
The wage, and why it is the smallest part
The figure everybody can name, and the one that explains least about what an hour costs.
03 / 07
What goes on top
Employer contributions, paid absence, equipment and insurance — ordinary, unavoidable and almost never written down in one place.
04 / 07
What it is divided by
The denominator decides the rate, and almost nobody writes down which hours are in it.
05 / 07
Getting the hour onto a job
Attribution, the hours that resist it, and what happens to an hour that reaches no job at all.
06 / 07
The pool and the base
What goes in the overhead pool, how it is spread, and why the allocation base is a decision rather than a fact.
07 / 07
What the rate cannot decide
A rate is an average. Used for pricing, make-or-buy or cutting, it answers questions it was never built to answer.
Software comparisons
Tools behind time, payroll and project-cost records
Three distinct formats based on structured product review and repeatable workflow checks.
The short version
Write the divisor next to the rate
A labour rate is a quotient, and most arguments about it are arguments about the denominator conducted as though they were about the numerator. Write down which hours the loaded cost is being recovered over, in a sentence, next to the number. That one line settles more costing disputes than any system, and its absence is why two people can both be right about what an hour costs and differ by a third.