You Know Your Charge-Out Rate. Do You Know How Many Hours Actually Reach a Job?
Ask a trade business owner what they charge for labour and you'll get an answer straight away. Ask what percentage of the hours they pay for actually end up costed to a job, and the answer usually takes a bit longer.
That second number is the one that explains most of the gap between a busy month and a profitable one.
Because you don't pay for charged hours. You pay for all of them. Travel between sites, time in the yard, loading and unloading, waiting on materials, the return visit to finish something off, the tidy-up nobody logged. Every one of those hours costs you the same as the hour spent on the tools. The only difference is whether it shows up against a job.
The number most businesses have never worked out
Labour recovery is simply the proportion of paid hours that land on a job. If your team is paid for 240 hours in a week and 180 of those are costed to jobs, your recovery is 75%.
It sounds like an accounting exercise. It isn't. It's the number that tells you whether your pricing reflects how your business actually operates.
Take that same 240 hours. Sixty hours a week aren't reaching a job. Some of that is entirely legitimate. Travel is real, yard time is real, and no business runs at 100%. The question isn't whether those hours exist. It's whether your rates were built with them in mind.
If you priced your labour assuming most of the week gets charged out, and the reality is closer to three-quarters, then every quote you've sent is quietly carrying a shortfall. Not a big obvious one. A small one, on every job, all year.
Why it hides so well
This is the part that makes labour recovery so easy to miss.
It doesn't show up as a loss. The jobs still look fine. Individually, each one comes in roughly where you expected, because the hours that didn't get costed simply aren't in the picture. The margin looks acceptable on the job report and disappears somewhere between there and the bank account.
Meanwhile the team is flat out. Everyone's working. Nobody's sitting around. That's exactly what makes it so hard to accept that something's wrong, because from the inside, it looks like the business is performing.
The hours are being worked. They're just not being counted.
The data is already there
Here's the good news. This isn't a number you need a new tool to find. If your team is putting time in through a job management system, the raw material is already sitting in your timesheets.
What usually stops businesses seeing it is one of three things. Time is entered late, so it gets rounded and guessed at rather than recorded. Non-job time has nowhere sensible to go, so it either disappears or gets dumped against whatever job was open. Or nobody has ever pulled paid hours and costed hours side by side, so the two numbers have never actually met.
None of those are software problems. They're setup and habit problems, and they're fixable in weeks rather than months.
What it looks like when you know the number
Once you can see your recovery rate, a lot of other decisions get easier.
You can price properly, because your rates are built on how the week really goes rather than how you'd like it to go. You can see which parts of the business run efficiently and which ones eat time. The same crew can look very different across service work and project work. You can spot a trend early, because a recovery rate that slides from 78% to 71% over a quarter is telling you something well before it shows up in the year-end figures.
And you can have a much more useful conversation with your team, because "we're losing money" is an accusation, while "a third of our travel time isn't getting recorded" is a problem you can solve together.
Where to start
Pick a normal week, not your busiest, not your quietest. Add up every paid hour across the team. Then add up the hours costed to jobs for that same week.
Whatever gap you find, don't rush to close it. Understand it first. Some of it will be unavoidable and belongs in your pricing. Some of it will be time that should have been charged and wasn't. Some of it will be work that was genuinely inefficient. All three need different responses, and you can only tell them apart once you can see the number.
Most businesses find the exercise uncomfortable the first time. It's also the fastest way to explain a year of hard work that didn't quite show up in the profit.
At e2e, this is one of the first things we look at when a business tells us they're busy but the numbers aren't stacking up. Getting time recorded properly, giving non-job hours somewhere to live, and building rates that reflect reality is straightforward work with a direct payoff. If you'd like a hand finding your number, get in touch.