Why are HAWs Important?
One of the first steps to Getting Gross or getting your Gross Margins to the right levels is to know your HAWs, otherwise known as your hourly average wages. HAWs will be used regularly to help calculate your pricing and to track your budgeted hours. HAWs are also used to help figure your costs when doing estimates. So are HAWs important? You bet!
- Learn what HAWs are.
- Learn how to calculate your HAWs
What are HAWs and how do they play into Gross Margin?
Remember that Gross Margin is what is left over after you pay for labor plus burden plus materials. The HAWs represent an average of what you pay a group (as an hourly average) of people directly performing the work. This includes maintenance, enhancements or any other revenue streams you have.
HAWs can also be calculated by the crew to get an even more accurate number for estimating purposes.
How to Calculate Your HAWs
Take a specific revenue portion of your business, such as maintenance, enhancements, irrigation, tree care, snow, etc., that represents at least 10% of your total revenue.
Here’s what you do:
- Take the total pay per hour for all the people in each revenue stream
- Add all of the pay rates together
- Divide by the number of people in this part of your business
- Add all of the pay rates of all the people charging time to a specific revenue stream
- Divide this total by the number of people
Now you have your HAW for that portion of your business. Remember, that all HAWs are not necessarily the same per revenue stream because you may have differently paid people performing the work in different revenue streams.
These will change as you add people or as people leave so you should review your HAWs periodically – twice a year is good – to make sure these are accurate. Knowing your HAWs comes in real handy when you are figuring your costs for estimating and for tracking your costs.
Action Steps: Calculate Your HAWs
• What are your HAWs for maintenance, trees, enhancements, irrigation and snow?
• Maintenance HAWs $________/ hr
• Enhancements HAWs $_______/ hr
• Irrigation HAWs $ __________/ hr
• Trees HAWs $ _____________/ hr
• Snow HAWs $ _____________/ hr