Man Day Formula

What it is

The man day formula is my universal sanity check for any bid on any trade. A man day is one worker for eight hours. Count the man days a job should take, multiply by the hourly rate for that labor tier, times eight, add materials, add 20% markup.

(Man Days x Hourly Rate x 8) + Materials + 20% Markup = Price

Every job breaks down to man hours spent doing the work, plus material, plus a reasonable markup. That’s the profit the business owner makes. It equals the cost of the job. I don’t care what tricks and tactics they use to break it down differently — at the base, it always comes down to that.

Three labor tiers cover most of what shows up on a rehab. Unskilled labor (demo, cleanouts, hauling) runs lower per hour. Skilled labor (framing, trim, flooring, drywall, tile) runs in the middle range. Licensed trades (electrical, plumbing, HVAC, gas) run highest. The jobs menu has the specific numbers in my market.

Prices don’t really change from one region to the next at the hourly level, because people make about the same amount of money everywhere. What changes is supply and demand. It is much more expensive where I’m at to do stucco than in Florida, because there are a lot more people that do it there and the hourly rate has come down. The underlying math is the same everywhere.

Why it matters

This is not how I build final budgets. I build final budgets with the jobs menu and the fliporithm, which carry real line-item costs I’ve tracked over hundreds of flips. The man day formula is how I check a bid I don’t have history on, or a trade I don’t see often.

It also neutralizes fear tax. When a contractor walks a job he doesn’t understand, he builds a multiplier into the bid without being able to explain it. The man day formula forces both sides back to first principles: how many bodies, how many days, what rate, what materials. Once you and the contractor are in the same conversation about those things, the multiplier tends to collapse on its own.

Within 20-30% of your man day estimate, you’re in the zone. Take the bid or negotiate small. Outside 30% in either direction, stop and figure out why. A bid that comes in much lower than your math usually means the contractor missed something and will change-order you to death. A bid much higher usually means fear tax or a contractor who doesn’t want the job and is pricing it away.

How it shows up

The tiers matter because they’re not interchangeable. A homeowner who hires a licensed electrician to hang drywall is paying triple rate for skilled labor. A flipper who hires general laborers to run electrical is paying a fraction of the rate and getting work that won’t pass inspection. The formula assumes you match tier to task.

The 20% markup is the floor. A one-man operator running lean might take that. A crew with trucks, insurance, and a shop needs 30-40% to keep the lights on. Above 50% markup, you’re funding somebody else’s office building.

Any time I get confused on a job I’ve never priced before, I just think: how long is it going to take and what is that guy worth per hour and what’s a reasonable markup? That’s all you need to get a defensible number in two minutes.

Related

fear tax, jobs menu, fliporithm, costco bid, scope of work, change orders