THE WAGE YOU BID AND THE WAGE YOU PAY.
A commercial job is usually estimated 6 to 12 months before the trade mobilizes, so it reflects the wage rates that existed at bid time and gets built at the rates that exist at build time. The hours in that bid come from an industry production standard, which describes an average journeyman doing the task. Staff the work with apprentices producing 60 to 80 percent of that standard and the same scope takes about 1.4 times the hours. Neither of those is a field problem, and neither one reaches the job cost report under its own heading.
Two ratios decide whether a mixed crew costs you anything: the production ratio and the wage ratio. An apprentice at 70 percent production and 70 percent of the journeyman wage costs about the same per unit of work, and comp, general liability and payroll taxes are all based on payroll dollars, so they scale with the wage and stay flat too. One item doesn't follow: a per-head benefit like the health premium is the same dollar figure whichever wage it goes with, so it takes a bigger share of the cheaper hour. What you pay for is that, the distance between the two ratios on the person in front of you, and the journeyman hours spent directing him.
WHAT IT MEANS.
Labor rate escalation is the difference between the wage rates a job was priced at and the wage rates paid when the crew reaches the site, widened whenever the crew's production doesn't match the standard the bid hours were built on.
Owners hear the pay question from the crew and the margin question from the estimator, and they're the same question asked from two ends. A first year apprentice sees the company billing his hour and wonders why his share is small. The company sees an hour that was priced at journeyman production against a wage set a year ago, and wonders where the labor budget went. Both are reading the same bid from different sides of it.
WHERE THE LABOR BUDGET GOES.
Bidding future wages to cover it
The obvious fix is to estimate at the rates you expect to pay eighteen months out. It loses work. You're bidding the same scope as everybody else and using a number they aren't, so you're 5 percent high on a package that gets awarded on price. The exposure is real. The place to handle it is the contract after award, not the number on the bid form.
Treating the production standard as a crew-neutral figure
An estimating standard describes an average journeyman doing the task. For electrical that's the NECA labor unit. It describes a hypothetical crew, and the estimate assumes you'll staff to match it without ever saying so. Nothing in the bid changes when you don't, which is why the variance turns up eight weeks into the job and gets blamed on the field.
Reading the averages onto the person in front of you
Sixty to eighty percent production against sixty to eighty percent pay is an average across a lot of people, and it cancels neatly on a spreadsheet. It doesn't cancel on a second year at 60 percent production and 75 percent of the journeyman wage, and nobody finds that out because production is almost never measured per person. The averages are fine. The individual is where the money moves, in both directions, and an apprentice beating the standard is invisible for the same reason.
WHAT IT LOOKS LIKE IN DOLLARS.
The production range Josh has seen apprentices produce against a journeyman standard. His own figure is that the same task takes about 1.4 times as long, which lines up with the middle of that range. The number that counts for your business is your own, measured per crew against the estimate, which almost nobody tracks and which costs nothing to start tracking.
The usual distance between the estimate and the trade getting on site, and longer on phased work. Every wage increase inside that window comes out of gross margin on a fixed price package, because the contract value was set at the front of it.
Take a package bid at 4,000 journeyman standard hours. Staff 60 percent of it journeyman and give 1,600 of those standard hours to apprentices at 70 percent production. That work now takes about 2,286 hours, so the job needs roughly 4,686 hours against 4,000 bid, 17 percent over on labor before anybody has had a bad week. The math is Josh's ratios applied to a round number, and your own mix and production will move it.
RESEARCH FROM OTHER SOURCES.
These figures come from another company's survey, not from SPM's clients. Each one cites the report and the page.
Billd's 2026 National Subcontractor Market Report found material costs rose 12 percent and labor costs rose 11 percent in 2025, while subcontractors raised their bids by an average of 10 percent.
Source: Billd, 2026 National Subcontractor Market Report, page 16 (survey of 623 respondents, published May 13, 2026).
WHAT CLOSES IT.
Take the standard hours, then apply your own production factor to the portion you know will be apprentice-staffed. That's a composite rate built from your real mix and it costs one line in the estimate. It doesn't raise your number the way bidding future wages does, because you're correcting the hours to your crew and not padding the rate against a wage that hasn't happened.
Wage escalation language on work starting beyond a stated window, the same way material escalation is handled on a fixed price package. A general contractor on an eighteen month schedule knows the exposure exists. Asking at signing is routine and the moment of signing is the one moment you have leverage, because that's when they need something from you.
Standard hours earned against actual hours used, split by the crew that did the work, and by the person where you can get it. That single comparison tells you what your own production factor is, which trades it holds on, and which people are beating the standard and paying for themselves. Without it the pay conversation and the margin conversation both rest on opinion, and the field takes the blame for a number set in the estimate.
FLAT MONTHLY FEE. NO SURPRISES.
Three tiers, priced by your trailing twelve month revenue. Which one you're in depends on how much of the work you want off your desk. No hourly billing. No payroll. The one-time onboarding fee is right here in the table.
| Last 12 months revenue | Monthly fee | One-time onboarding |
|---|---|---|
| Under $1M | $1,900 to $3,300 | $1,000 |
| $1M to $3.5M | $2,600 to $5,300 | $1,500 |
| $3.5M to $6.5M | $3,800 to $8,300 | $3,000 |
| $6.5M to $9.5M | $5,100 to $11,800 | $4,500 |
| $9.5M to $12.5M | $6,100 to $14,900 | $6,000 |
| $12.5M to $15.5M | $7,400 to $17,650 | $7,500 |
| $15.5M to $18.5M | $9,400 to $22,400 | $9,000 |
| $18.5M+ | Quoted individually | Quoted individually |
The onboarding fee covers migrating your books back to the start of your last taxable year and getting you fully operational in 60 days. It's billed once, with your first invoice. It's the same for all three tiers. Your first month is prorated, and your monthly engagement starts on the first of the first full month.
Range reflects the three tiers below. Which one you're in depends on how much of the work you want off your desk. No payroll. No hidden line items. The onboarding fee is right here in the table.
You stop guessing.
You get the CFO work. Job costing built against the way you estimate, a 13 week cash forecast, monthly WIP, and a meeting every month that ends in decisions and never in a report.
Your bookkeeper still does the books.
Every job shows its margin while it is still open.
Everything in Core, plus the bookkeeping and bank reconciliations done for you, and the job costing and WIP software set up, loaded with your cost codes, and managed every month. Use your own online software, or move to ours and we cover it.
A bookkeeper we choose does the books and reconciliations. No payroll.
You approve, and the money side gets handled.
Everything in Strategic, plus a controller we choose who handles your bills and receivables for you the way an in-house controller would. They call vendors, pay the bills and keep the accounting current. We plan the cash flow first, and you approve every payment because it is your money.
A controller we choose does the payables and receivables. No payroll, no pay applications, no collections.
FREQUENTLY ASKED.
