Charging for Time

When you call in a scale technician, refrigeration engineer, plumber, electrician, joiner, tiler – in fact anyone and you can expect a standard call out charge plus a rate per hour after the first 30/ 60 minutes. Why then is it that butchers are embarrassed to charge for their time. Granted the labour costs are usually borne by the retail price especially when the product is labour intensive.

What are you going to charge those customers who want their turkeys or ducks boned out?

Even more tricky it appears is the business of charging when that is the only return that you are going to receive. That happens when a butcher is asked to provide only his skills. Do we value these skills any less than the tradesmen that are called in to fix things?

The price put on cutting for farmers should in some way reflect the time it takes to cut the beast / lamb / deer etc. If you charge the direct labour cost say for example £8 per hour, then you are only recovering that cost.

You employ a member of staff for 52 weeks in the year. Four of these are taken off as holidays, another nine might be taken in public holidays. Most work a five day week so that reduces the days available by 104). According to the Health and Safety Executive 4 days per employee are taken off sick by those working in small businesses. That brings down the number of worked days to a probable 228 (365 – 104 – 20 – 9 – 4). With an average day of 8.4 hours that gives 1915.2 hours.

At a rate of £8 per hour, an employee working a 42 hour week would be paid £348 (39 hours @ £8 plus 3 hours at time and a half, 3 hours @ £12). That is £18,096 per annum.

The total labour cost £18,096 is then divided by 1915.2 to give an hourly cost of £9.45.

Given that most members are short of skilled staff, any rate charged out should assume that overtime is being paid. The marginal cost then is £12 per hour but that makes no contribution to the businesses overheads and net profit.

If a business is making a gross profit on sales of 45%, 32% of sales might be the labour costs, 7% other costs and 6% net profit. Charged out labour costs must therefore make their contribution to these costs. This takes the hourly rate from £12 (32%) to £16.88 (45%).

Everyone knows though that a butcher's productive time will be less than 100%. There is always something that prevents you from keeping the head down. If just 10% of time is unproductive that takes the hourly rate to £18.76. Apply your own rates of pay and £20 per hour must have to be the absolute minimum.

When we asked members on e mail about their charges to bone and prepare a lamb we had a dozen responses that averaged out at £17 for a 24 kilo lamb excluding the killing charge. The variance here was great, ranging from £10, £12 and £15 to £20, £24 and £25. Clearly members value their employee's time differently or some have super efficient workers.

When we looked at beefing and packing carcases of beef this varied from £135 to £386 based on a 300 kilo beast. At the low end there was 45p, 55p and 60p per kilo while at the other end £1.00 and £1.16. The sensible price seemed to be around mid 80s.

How much you charge is up to you but not all of the meat cut for farmers is for their own use. When they become wholesalers you are going to lose sales as well.