What do you think the payroll as a percentage of total sales should be?

[Cmon]

HI I'M NEW.

 

I KNOW MY PAYROLL IS WAY TOO HIGH WHEN I COMPARE TO INDUSTRY STANDARDS I FIND ONLINE.

 

LAST YEAR I WAS AT 22% SOME INFO I HAVE FOUND HAS SAID 12-14%. IT WOULD TAKE A LOT FOR ME TO GET IT DOWN THAT LOW.

 

READING NUMBERS ONLINE I THINK CAN BE UNREALISTIC SO I STUMBLED ON THIS FORUM WHILE LOOKING AT STUFF ONLINE.

 

I FIGURED I WOULD ASK...

 

THANKS

 

 

 

 

[mspecperformance]

Do you pay salary? Commission or flat rate? Do you have a lot of office people? How many people and what are their roles in your company?

[Cmon]

I PAY HOURLY TO MECHANICS I RUN THE OFFICE, BOOKING KEEPING, AND WORK ON CARS I AM A SMALL SHOP ME A FULL TIME GUY AND PART TIME GUY.

 

THANKS

[mspecperformance]

If you are paying hourly that means that your payroll is a fixed cost and if it a high percentage of your gross sale then you need to increase sales.

 

Rule of thumb is to not go over 30-35% total payroll from your total sales. If you are at 22% your not in bad shape. Would have to know more about your numbers.

[lmcca]

Welcome to the forum, one other rule of thumb for forums is to not type in all caps, all caps is like your yelling at us

 

Anyway, welcome!

[bstewart]

I've seen the 20-20-40-20 rule:

20% cost of goods sold

20% production labour

40% operating expenses including non-production labour

20% profit margin

[mspecperformance]

labor + non-labor payroll shouldnt exceed 30-35%

[Cmon]

Thank you

 

No more caps for me either...

[alfredauto]

I'm at 50% cogs, 15% payroll incl taxes, 30% operating expenses. I sold a lot of tires and used cars last year and that brought the cogs way up. 5% net profit isn't my idea of perfect but we did a huge gross sales # to compensate.