Wages % Calculator Explained:
a) What is this? This calculator tells you, as a percentage of total sales, the labour costs for a business.
b) What does this tell me? This can be used to see how your wages are changing as a percentage of sales. There are other measures that you can use, but this is a very common method for measuring wages.
c) Why should I use it? To help you manage and contain the costs in a business. It will also allow you to track this number more carefully. If the percentage is too low it can often mean a stressed staff and a higher staff turnover, missed sales or that you have improved efficiencies. A higher percentage wages often might means reduced profit because you are employing too many staff. Most businesses manage labour costs carefully to accommodate changes in sales.
d) Caution: There are other measures for managing wages that you should be aware of. Further, you should be aware that sometimes a higher or indeed lower wages % can be good or bad depending on the situation. Changes to the wages % is a business decision, this calculator simply provides you with data.