Flat-rate shops bill the book time for a job, not the time it actually takes. Dividing billed hours by clocked hours shows each technician's efficiency.
Above 100% means the tech beats book time; below means jobs run long.
The example
A technician billed 45 flat-rate hours but was clocked in for 40 hours this week.
| A | B | |
|---|---|---|
| 1 | Item | Value |
| 2 | Billed hours | 45 |
| 3 | Actual hours | 40 |
| 4 | Efficiency | 112.5% |
The formula
Labor efficiency is billed (sold) hours divided by actual clocked hours:
How it works
What it tells you:
- Sum the flat-rate hours billed across all of a tech's jobs for the period (45 here).
- Record the actual hours the tech was clocked and turning wrenches (40 here).
- Divide: 45 ÷ 40 = 1.125, or 112.5% efficiency — the tech sold more time than they spent.
- Format as Percentage. Many shops target 100%+ for flat-rate techs; under 90% signals lost labor.
Multiply billed hours by the labor rate to see revenue, and compare against the tech's pay to see gross labor profit.
Try it: interactive demo
Enter billed and actual hours; efficiency updates against a 100% target.
Variations
Shop-wide efficiency
Sum all billed hours and all actual hours, then divide the totals.
Labor gross profit
Billed revenue minus tech cost for the period.
Pitfalls & errors
Only count productive clocked hours. Including lunch or shop-cleanup time understates true efficiency.
If actual hours is blank or zero you get a #DIV/0! error — wrap the formula in IFERROR or guard with IF.
Practice workbook
Frequently asked questions
What is a good labor efficiency number?
Is efficiency the same as productivity?
How do I handle comebacks?
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