Define the decision before calculating
Record these inputs and boundaries
- Choose the decision period and reconcile revenue and costs to it. (not complete)
- Separate owner delivery, management, sales and administration hours where useful. (not complete)
- Choose and label the purpose of the assumed rate. (not complete)
- Keep actual pay, drawings and accounting classifications separate. (not complete)
- Record which decision changes if owner time is included. (not complete)
Compare a labelled base and downside scenario
| Decision input | Base case | Downside or boundary case | Decision checkpoint |
|---|---|---|---|
| Reported period profit | 8,000 before owner-labour adjustment | Same reported result | Preserve the accounting view unchanged |
| Owner labour assumption | 80 hours × 40 = 3,200 | 120 hours × 40 = 4,800 | Label hours and rate as user assumptions |
| Adjusted decision view | 4,800 | 3,200 | Test price, scope, process or capacity—not payroll treatment |
- Reconcile the reported profit view for the chosen period.
- Record owner hours by the activities relevant to the decision.
- Apply a clearly labelled scenario rate without calling it market pay.
- Show the adjustment and adjusted decision result as separate rows.
- Test how price, scope, process or staffing changes the time burden.
Interpret the result and choose the next step
An owner-labour adjustment is a decision lens: it makes time visible without rewriting the accounting records or claiming a universal wage.
Run the exact calculation in the registered planner
- Labour Budget Scenario Planner
Translate role headcount, active months, compensation, contractor and overtime assumptions into a period labour budget
Decision questions
- What hourly rate should I use for owner labour?
- There is no universal rate. Choose a rate that fits the decision purpose, label it as an assumption and test a range when the choice is material.
- Does the adjusted result replace reported profit?
- No. Keep both views visible. The adjustment supports a business decision and does not rewrite the underlying accounts.
Method and source scope
- Labour Budget Scenario methodology — Margin101: Product-owned calculation, units, assumptions and limitation contract used by this guide.