What is janitorial labor percentage?
Janitorial labor percentage compares the labor cost assigned to an account with that account's revenue for the same period.
Use the same time period for labor and revenue.
If an account bills $12,000 per month and carries $7,200 of loaded labor, labor percentage is 60%.
Decide what you mean by labor cost
A labor percentage based only on base wages will be lower than one based on wages plus payroll burden. Neither is automatically wrong, but the metric becomes misleading when the definition changes from account to account or month to month.
For account profitability, loaded labor is often more useful because it connects hours and wage to the direct employer costs carried by the service.
See Loaded Labor Cost for Commercial Cleaning for the formula.
There is no universal “good” labor percentage
A healthy labor percentage depends on what else the account has to pay for. A contract with customer-provided supplies and little supervision can support a different labor percentage than an account with heavy supplies, equipment, subcontracting or dedicated management.
Compare plan to actual
The strongest use of labor percentage is not comparing your account with an internet benchmark. It is comparing the account with its own operating plan and history.
- If planned labor was 55% and actual labor is 63%, investigate the eight-point gap.
- If hours are high, review productivity, staffing and scope.
- If hours are on plan but labor percentage rose, wage or payroll burden may be the driver.
- If labor is stable but margin is weak, look at supplies, other direct cost or price.
Hours and wage can move the percentage differently
Two accounts can both show a rising labor percentage for different reasons. One may be using too many hours. The other may be operating exactly on schedule with a higher average wage. The corrective actions are different, so keep those drivers separate.
Revenue changes matter too
Labor percentage can rise even when labor dollars are flat if the revenue denominator falls. Credits, partial billing, lost add-on work or pricing changes can alter the ratio. Always look at the actual dollars behind the percentage before assigning a cause.
Do not stop at labor percentage
An account may have a reasonable labor percentage and still miss its target because supplies, subcontractors or account-specific expenses are high. Conversely, a labor-intensive account may still produce healthy contribution if the price was designed for that cost structure.
Use Commercial Cleaning Profit Margin to connect labor with the full recurring account view.
Use labor percentage to prioritize questions
Month over month, the metric is valuable for quickly identifying which accounts deserve investigation. It can tell you where to ask questions, but not by itself what decision to make.
Check one account now
Use the free Account Profitability Check to combine labor with revenue, supplies and other recurring cost and see whether the account is supporting its target economics.