Gross Profit per Labor Hour:
Monthly Trend + Job Type Breakdown

How to Analyze Gross Profit per Labor Hour in Excel

In this tutorial, you’ll learn how to identify which job types are truly profitable by calculating gross profit per labor hour. Even when job types generate similar revenue, this metric reveals which jobs create profit and which ones consume capacity without delivering margin.

1. Extract the Month from the Date

• Use the TEXT() function to pull the month from the date column.
  
• This allows you to group revenue and costs by month.
  

Example logic:

• Use mmmm for the full month name
  
• Use mmm for the abbreviated month
  

Once entered, double-click the fill handle to apply it to all rows.

2. Create a Month List

• Type January in a cell.
  
• Drag down through December to generate all months.
  
• If your dataset spans multiple years, you can add a year column, but this example focuses on one year.
  

This month list will drive all monthly calculations.

3. Bring Cost and Revenue Columns into the Summary Area

• Copy the cost categories and invoice amount headers from your data sheet.
  
• Paste them into your summary section so calculations align cleanly.
  

This keeps your model structured and easy to read.

4. Calculate Monthly Revenue and Costs Using SUMIFS

• Use SUMIFS() to calculate totals by month.
  
• Start with Final Invoice Amount.
  

Formula logic:

• Sum range: the dollar amount column
  
• Criteria range: month column
  
• Criteria: the selected month
  

Apply absolute referencing where needed:

• Lock the month column so it doesn’t shift when dragging across
  
• Allow the month value to change when dragging down
  

Once set up correctly:

• Drag the formula across for all cost categories
  
• Drag it down for all months
  

Format dollar values using Ctrl + Shift + 4.

5. Format Labor Hours Correctly

• Labor hours should be formatted as numbers, not currency.
  
• Use Ctrl + Shift + 1 to convert them to numeric values.
  

This ensures labor-based calculations remain accurate.

6. Calculate Total Cost of Goods Sold (COGS)

• Add all cost categories together for each month.
  
• This represents your total cost to deliver the work.
  

Having COGS broken out monthly gives you visibility into cost trends over time.

7. Calculate Gross Margin (Dollar and Percentage)

• Gross Margin (Dollar)
  
  • Revenue minus Total COGS
    
• Gross Margin (Percentage)
  
  • (Revenue − Total COGS) ÷ Revenue
    

Format percentages using Ctrl + Shift + 5 and center-align for readability.

This confirms how much profit remains after direct costs.

8. Calculate Gross Profit per Labor Hour

• Divide Gross Margin (Dollar) by Labor Hours.
  

Formula logic:

• Gross Profit per Labor Hour = Gross Margin ÷ Labor Hours
  

This metric shows how efficiently labor generates profit, not just revenue.

9. Create a Monthly Gross Profit per Labor Hour Chart

• Highlight the Month column and Gross Profit per Labor Hour values.
  
• Insert a Line Chart.
  
• Adjust the axis range to emphasize variation.
  
• Optionally smooth the line to better spot peaks and valleys.
  

This chart reveals seasonality and operational efficiency over time.

10. Create a Job Type Analysis

• Use UNIQUE() to generate a list of Job Types.
  
• Paste values to remove formulas.
  
• Sort alphabetically if desired.
  

Repeat the same SUMIFS logic as before:

• Sum revenue by job type
  
• Sum costs by job type
  
• Calculate COGS
  
• Calculate Gross Margin
  
• Calculate Gross Profit per Labor Hour
  

This allows direct comparison across job categories.

11. Create the Job Type Profitability Chart

• Highlight Job Type and Gross Profit per Labor Hour.
  
• Insert a Line or Column Chart.
  
• Format values without decimals if desired.
  

This final chart shows:

• Which job types produce the highest profit per labor hour
  
• Which jobs appear profitable but actually drain capacity
  

Result

You now have two powerful views:

• Monthly Gross Profit per Labor Hour
  
• Gross Profit per Labor Hour by Job Type
  

Together, these metrics help you:

• Prioritize high-margin work
  
• Reduce low-efficiency jobs
  
• Allocate labor where it creates the most value