Work Out the Real Day Rate
Calculate a minimum crew-day target using variable cost, overhead allocation, and contribution margin.
A three-person crew is scheduled for a one-day removal at $2,900. The owner wants to know whether a $300 discount still leaves a healthy day. Contribution margin: revenue minus variable job cost, then compare the remainder to overhead recovery and profit target. The common shortcut is counting wages and fuel only, then treating the rest of the price as profit. List direct variable costs Labor with burden $1,020 + fuel $95 + dump fees $160 + plywood/misc $45 = $1,320 variable cost. Use burdened labor, not base wage. Payroll taxes, workers comp, and overtime change the real cost of production.…
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