Time Has Come Today

Long before Christopher Walken begged for “more cowbell,” the Chambers Brothers were making cowbell history!

Time Has Come Today” peaked at #11 in 1968, ranked 18th in a listing of the Greatest Psychedelic Songs of All Time (I’d have put it a tad higher – just sayin’), and it’s an altogether appropriate song for today’s blog post.

Since early April we’ve been reviewing the answers to our 35 question quiz on Price, Value, Customers and Hydronics.  The goal is to shake out attitudes and preconceived notions we all have, and try to put a different spin on those attitudes and notions. We’re getting close to the end (check out the original list here), but this post is going to focus specifically on a hard question that tends to hit craftsmen right between the eyes.

#32. You can cut job costs by making some of your own materials rather than buying them ready made.  FALSE!

Time and money are interchangeable – you can always save more of one by spending more of the other.  But then again, time costs money.  Your labor isn’t free – it costs a lot more than your materials. If an assembled product saves you time, it’s a good thing – even if the assembled product costs a lot more than the parts you’d need to make something similar yourself.

For instance, if the parts cost $500.00 and it takes you 5 hours at $80.00/hour to assemble them, that’s $900.00 in cost.  If an assembled part costs $820.00 and only takes 1 hour to install, that’s $900.00 too.

Same-same, right?

Well, not really.  Say you add a 20% profit margin on top of that job cost (or 5%, or 10% – that’s your call).  Your selling price for either job would be $1,125, while the profit of $225 represents 20% of your selling price.

However, if you bought the already assembled product you’d make that $225 in only one hour.  If you field-assemble the parts, you make $225 in 5 hours.  In Scenario A you make $225 per man hour; in Scenario B you’re making only $45 per man hour.  In this case, spending time to do the job has a whole new meaning.

“Yeah, but I’d rather pay myself to put it together than pay some manufacturer!”

Heard that one many times before, but the argument isn’t supported by logic.  Say you’re a one man shop, that $80.00/hr (or whatever you charge) isn’t all going into your pocket, is it?  Whatever you pay yourself is overhead, friend.  It’s listed as Direct Labor in your Profit & Loss statement, and Direct Labor, like all overhead, is deducted from your selling price to determine your profit.

Yes, in the above scenario you are calculating your 20% profit on both the materials and labor costs, so a portion of that $225 worth of profit is coming from your five hours of labor.  But you can’t get past that “how much profit am I making per man-hour on the job” question.  Scenario A, when you’re materials-heavy and labor-light, you’re bringing home $225 profit in 1 hour.  Scenario B? $45 profit in 1 hour. As they say, the math don’t lie!

Oh, and you have 4 extra billable hours to go do something else.  How about that?

Even in a down economy – and maybe especially in a down economy – labor-intensive isn’t good business unless your labor is dirt cheap. So unless you’re Harry Potter and can shout “hydronicus erectus” to make all those parts jump up and install themselves, you’ll need to spend precious labor inventory to get the job done.  Time is your inventory. Make sure you make the most of it.

The Chambers Brothers may be best known for their signature song, but in 1965 they did an awesome version of one of my all-time favorites…

So people get ready – we’re going to tackle Question #33 next time.

Leave a Reply

You must be logged in to post a comment.