Labour Counted Twice — Why Your Calculated Price Is Higher Than It Should Be

This article covers management-accounting principles for decision support. It is not accounting or tax advice for your specific circumstances. Have your own accountant confirm how your costs are classified.

The most common error, and the hardest to see

You open a job-costing file and fill in two cells:

• Monthly fixed costs: ฿420,000 — copied from the profit and loss statement: rent, salaries, utilities, admin
• Fitter labour per hour: ฿350 — derived from fitters' salaries divided by working hours

Both look reasonable, and almost everyone fills them in this way.

But if the fitters' salaries are inside that ฿420,000, you have just counted one sum twice.

How much, in numbers

Suppose the ฿420,000 of fixed costs includes ฿100,000 of salaries for four fitters, and hours actually sold are 416 a month:

You are charging for those four people at nearly two and a half times what you actually pay them.

On a 24-hour job — overcharged by 24 × ฿350 = ฿8,400 Across the month — labour charged into jobs of 416 × ฿350 = ฿145,600, when the money that actually left was ฿100,000

Where is the harm, when profit looks better?

This is the question that lets the error survive for years — because double counting makes the profit figure on screen look better, not worse.

The real harm comes two ways, and neither shows up in the file:

1. You lose work that would have been profitable. Your quote is roughly ฿8,400 too high on a 24-hour job. A competitor who costs correctly can quote below you and still earn the same margin. You lose, and conclude "they are buying the work" when in fact they simply did the arithmetic properly.

2. When you discount, you cannot tell how far down you have gone. This one is more dangerous, because the floor you believe in is not the real floor. A customer negotiates, you calculate that 8% margin remains and agree — when in truth you may have 18% left (more room than you thought), or, if other costs went missing at the same time, you may already be below the real floor without knowing.

A number that is wrong in the direction that feels comfortable is a number nobody goes back to check.

The correct dividing line

One rule:

Labour that belongs in the job cost = labour the business pays extra because it took the job

A one-question test: "If I turn this job down, does this money still leave?" If it does, it is not a cost of this job — it is already spread in through the hourly overhead rate.

🔴 The root cause: advice that sounds right

What makes this error so widespread is the most commonly repeated instruction of all:

"Take the total expenses from your profit and loss statement and put them in the fixed-cost cell."

That advice is right about completeness and leads straight to double counting, because the expense total always includes fitters' salaries. Then the same file offers a "labour per hour" cell, and the person filling it in fills both, in perfectly good faith.

The remedy is not to abandon the accounts, but to separate out the salaries of anyone you intend to charge an hourly rate for, then pick one of two routes:

• Route A (simpler, recommended) — leave fitters' salaries in fixed costs and set the hourly rate for salaried fitters to ฿0, entering only overtime and subcontractors
• Route B — take fitters' salaries out of fixed costs (leaving ฿320,000) and charge the hourly rate in full

Both give the same total. What is forbidden is doing both at once.

What to do

1. Open your fixed-cost total and check whether fitters' salaries are in it — this is the only check that matters
2. If they are, set the hourly rate for salaried fitters to ฿0 and enter only labour actually paid extra
3. Use the question "if I turn this job down, does this money still leave?" whenever you are unsure
4. Keep the cost of one person in one place — salary, social security and benefits together, never scattered
5. Separate presentation from calculation — show labour as a quotation line if you like, but calculate the cost correctly first, then split the figure

The tool for doing this today

Job Costing & Pricing Calculator was designed knowing this error would happen:

• It warns when a wage is being counted twice against salaries already sitting in fixed costs — you do not have to catch it yourself
• The manual inside the file does not tell you to lift the total from your profit and loss statement, because that instruction is the root cause
• You get the four numbers to keep apart when a price is pushed — cash floor · break-even · lowest price clearing your minimum margin · the price to quote — from a cost that is not double counted
• Every setting keeps a "factory value" to copy back from when you break something
• A self-test sheet of 24 cases you can run yourself
• No macros — Excel, LibreOffice and Google Sheets all open it

One-time payment of ฿999 — launch price until 31 Dec 2026 (regular price ฿1,490) · includes 7% Thai VAT · full Thai tax invoice available · instant download after payment

ℹ️ The workbook itself is in Thai — sheet names, labels and the in-file manual. The formulas and the logic are language-independent, and the product page shows renders of the real file so you can see exactly what you receive.

→ See the product

Read next

• Are 4 Fitters Really 640 Hours a Month?
• Can You Take a Job Below Cost?