Chris CollinsHelping Struggling Dealerships Build Profitable, High-Performing Service Departments | Automotive Coaching Expert | CEO

You Can't Manage What You Don't Measure (The True Cost of Unapplied Labor)

26 Dec 2025 · 1 min

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Chris Collins explains how to calculate your true labor cost by measuring unapplied labor. Subtract labor gross from labor sales, divide by hours sold, and you'll find your actual cost per hour. A technician earning $30/hr can cost you $40-$50/hr when you factor in unpaid time.

Questions this video answers

Labor sales = $1,000,000; labor gross profit = $700,000.

$300,000.

Highest paid tech = $30/hour; cost of sale can be $40–$50/hour due to unapplied time.

We should probably circle back for just a second on the example you were given of. If you take the the cost and divide it by the hours, there is a. There's a real world scenario where with unapplied time, even if your highest paid tech is 30 bucks an hour, you can have a cost of sale of 40 or 50 bucks an hour because of unified time.
Let's just kind of explain how to do that really quick. So you would take your total labor.
Sales, you.
Would subt subtract your. Your total labor gross. So this is less sublet or anything else. You would subtract your gross. The difference between sales and gross is what you're paying the tech. So let's say you had a million dollars in labor sales and your gross profit was $700,000. Then the difference is $300,000. And then you would divide that by how many hours you.
Sold and what.
Happens a lot in truck. And you've seen more truck financials hoagie than I have. And you have too, Adam. But my recollection is that I would say most truck dealerships run at 50% cost.