What a labour hour is
A labour hour is the standard time for an operation expressed in hours: how long, by the norm, it takes to replace the seals of a hydraulic cylinder, for example. The cost of the work is labour hours × hourly rate.
The norm and the actual time are different things. An experienced mechanic can finish faster than the norm, a beginner takes longer, but the customer pays for the norm. That way the price is known before the repair and does not depend on who took the job.
Where time standards come from
- Equipment manufacturer standards. Many manufacturers give service partners labour input standards for typical operations.
- Industry reference books on repair labour input.
- Your own timekeeping. If an operation is done regularly, its time can be measured across several repairs and the average taken as your standard.
Which standards you apply is best fixed in the contract with the customer or in the price list: then the question "why three hours and not two" does not arise.
How to calculate your rate
The contractor sets the rate. The usual logic is:
- Add up the costs for a period: mechanics' pay with contributions and overheads — workshop rent, tools, transport, communications, accounting.
- Add the planned profit.
- Divide by productive hours — the ones mechanics actually sell to customers, not all working time.
An illustration (numbers for the example, not a market rate): mechanics cost 600 000 ₽ a month, overheads 250 000 ₽, planned profit 15 %, four mechanics sell 140 hours a month each. Rate = (600 000 + 250 000) × 1.15 ÷ 560 ≈ 1 745 ₽ per labour hour.
A common mistake is dividing by all working hours. Part of the time goes to travel, waiting for parts and paperwork, and if that is not accounted for, the rate comes out too low.
How to price the work on an order
Each operation is a line: labour hours and rate. If the rate differs between jobs (machining is usually dearer), show it on the line.
| Operation | Hours | Rate | Amount |
|---|---|---|---|
| Cylinder diagnostics | 2 | 3 500 ₽ | 7 000 ₽ |
| Seal replacement | 3 | 3 500 ₽ | 10 500 ₽ |
| Grinding and chrome plating of the rod | 2.5 | 4 200 ₽ | 10 500 ₽ |
The work total is 28 000 ₽. Parts, materials, other costs and VAT (if you are a payer) are added to it. All of that can be calculated in the repair cost calculator and downloaded as an XLSX with formulas.
Call-out and waiting
Travel time and downtime not caused by the contractor are not part of operation standards. They go on a separate line — "call-out", "waiting" — in the other costs of the work order, so the customer sees what they pay for.