A wage group answers two questions: what does an hour of this employee really cost me? And what do I have to charge for it so that something is left over? The first figure is called labor cost in Zirko, the second hourly charge-out rate. You calculate with the second one.
The five rows in the dialog
Settings → Wage groups tab. All amounts are per hour, and Zirko calculates from top to bottom.
| Row | What belongs in it |
|---|---|
| Hourly wage | The gross hourly wage from the payroll. Nothing else. |
| + wage-related costs | What is added on top of the wage: employer contributions, employers’ liability insurance, holiday and Christmas pay, sick pay, protective clothing. |
| + overheads | What the business costs even when nobody is on site: office, vehicles, tools, insurance, tax adviser. |
| = labor cost | Zirko calculates this. Here you neither earn nor lose anything. |
| + markup | Risk and profit, in per cent. |
| = hourly charge-out rate | Zirko calculates this. This is the figure you calculate with. |
The overheads are the trap
Divide your annual costs without wages and materials by the hours your team spends on sites. That is not 2,080 hours. Deduct leave, sickness, public holidays, workshop time, travel and writing quotes. Anyone who calculates with 1,900 instead of a realistic 1,400 spreads their overheads over a third too many hours — and loses money on every job.
Cross-check: if your charge-out rate is well below twice the gross hourly wage, you have almost certainly calculated too tightly.
Three to five groups are enough
Foreman, qualified tradesperson, laborer, apprentice. One group per employee is a beginner’s mistake: it costs upkeep with every pay rise, and the customer is not paying for a Mr Smith but for an hour of a qualified tradesperson.
Exactly one group can be the default — it is suggested in new documents. Without a default you have to choose by hand every time, and the line item where you forget costs you money.
When the wage changes
A new rate applies to new calculations. Quotes and invoices already written stay as they are — an invoice that has gone out must not change retrospectively. So after a pay settlement: adjust the wage groups, then go through the open quotes.