Your posted door rate is not what you actually earn. Divide real labor revenue by the hours you billed and you see the effective labor rate — after discounts, comebacks, and waived time.
$4,500 of labor over 50 billed hours is a $90 effective rate — the honest number to compare against your posted rate.
The example
Three technicians' labor revenue against the hours they billed.
| A | B | C | D | |
|---|---|---|---|---|
| 1 | Tech | Labor revenue | Hours billed | Effective rate |
| 2 | Tech A | $4,500 | 50 | $90.00 |
| 3 | Tech B | $6,000 | 60 | $100.00 |
| 4 | Tech C | $3,400 | 40 | $85.00 |
The formula
A single division reveals the true rate:
How it works
The effective rate strips away the marketing number:
B2is the actual labor dollars collected — after any discounts or waived time.C2is the hours you billed customers for that labor.- Dividing them gives what each billed hour truly earned, which is usually below the posted door rate.
If your effective rate trails your door rate badly, discounts and comebacks are quietly eroding margin.
Try it: interactive demo
Enter labor revenue and hours billed.
Variations
Compare to door rate
Show the gap as a percentage of your posted rate.
Pitfalls & errors
Use labor revenue only — including parts revenue inflates the rate and hides labor leakage.
Bill hours, not clock hours: flat-rate shops should divide by the hours sold, not the time the tech spent.
Practice workbook
Frequently asked questions
How is this different from my door rate?
Should parts be included?
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