Managing the costs associated with your business is essential. One of the most significant expenses for any MSP is the cost of employing technicians. By accurately calculating the technician burden rate—the true cost of employing your team—you gain valuable insights into your financial performance and can make informed pricing decisions.
This guide will walk you through the entire process of setting up your technician burden rate in SuperOps.
What is Burden Rate?
The technician burden rate represents the total cost of employing a technician in your MSP. This calculation includes the technician's hourly rate, salary, taxes, insurance, and other related costs. Since the technician burden rate constitutes a significant portion of your MSP's costs, it plays a crucial role in profitability calculations.
How Burden Rate is Calculated:
The burden rate calculation involves summing up all costs associated with employing a technician. Here's an example:
Gross Wage: $20.00
Employer Payroll Tax: $1.75
Worker’s Compensation Insurance: $0.53
Company-Paid Benefits: $2.45
Fully Burdened Labor Rate: $20.00 + $1.75 + $0.53 + $2.45 = $24.73 per hour
Why Burden Rate is Important:
If a technician costs $24.73 per hour (as calculated above) and you bill clients $100 per hour for their work, your profit is $75.27 per hour. Without considering the burden rate, you risk underestimating costs, which can lead to poor pricing strategies and reduced profitability.
Adding Technician Burden Rate:
To add burden rates for a technician, navigate to Settings > Technicians under My MSP.
Select the technician for whom you want to add the burden rate.
Enter the burden rate value as shown below.
💡SuperTip
To accurately calculate the burden rate of a technician, follow the below tips:
Include all components such as salary, payroll taxes, insurance, and company-paid benefits.
Review and update burden rates periodically to reflect changes in costs.
Ensure consistency in your calculations across all technicians to maintain accurate profitability metrics.
This will be useful when you use our Labour Revenue Reports, where you can see your more revenue-generating technicians and the least. Check out this article to learn more about Labour Revenue Reports.