Labor Efficiency (Trades)

It measures how much of payroll time actually lands on paying jobs versus travel, waiting, or shop time.

Formal definition

Labor efficiency equals billable or productive field hours divided by total paid hours, expressed as a percentage.

Why it matters

HVAC, plumbing, and electrical firms with efficiency below 75% often need higher prices or better dispatch just to break even.

Where you see it

• Field service management software
• Trades business coaching
• Union productivity studies
• Franchise operations manuals
• Home services M&A diligence

Worked example

1. Billable hours: 680.
2. Paid hours: 800.
3. Efficiency = (680 ÷ 800) × 100 = 85%.
4. Interpretation: 85% of paid time is billable on jobs.

How Business metrics calculates it

Billable or productive labor hours ÷ Hours paid × 100 (trades fields).

The range we use for status labels

On Business metrics, the status band for this KPI is roughly 75 to 85. Higher values are generally healthier in this band. Your niche can sit outside it honestly — the label is a prompt to read the coaching, not a certificate.

Where people fool themselves

Efficiency that compares billed hours to clock hours will look poor on training weeks. Tag those weeks; do not rewrite the metric to protect a junior’s first month.

Run it on your own numbers: the Trades & Home Services calculator.