Profits with Pajak – Ep. #474
Production Rates: The Number That Decides If You Make Money
Date: March 16, 2026
Host: John Pajak
Episode Overview
In this episode, John Pajak delves into the vital topic of production rates within the green industry, explaining why understanding this number can be the difference between true profitability and mere busyness. John methodically breaks down how to calculate your real hourly cost, how production rates tie into business sustainability, and actionable steps to track, analyze, and improve your profitability. The episode is densely packed with practical advice for green industry business owners who want to take control of their numbers and ensure their work translates into actual profits.
Key Discussion Points
What is a Production Rate and Why Does it Matter?
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Definition: Production rate is the revenue your crew generates per hour while they’re working. It’s the metric that shows if your business is sustainably profitable or simply busy on paper.
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Quote:
"Are you profitable or are you just busy? Because in the green industry, it's very easy to confuse the two."
— John Pajak [00:00] -
Billing plenty of work means little for your bottom line if your production rates aren’t covering all your real costs and targeted profits.
The Real Cost of Your Crew: Calculating True Hourly Rates
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Most owners mistakenly stop at raw wages (e.g., $38/hour for two workers) without including all the labor burden:
- Payroll tax (FICA, Social Security, Medicare)
- Unemployment tax and workers’ comp
- Payroll processing and admin
- Uniforms, paid time off, training, and support staff
- These items often add 20-40% to wage costs.
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Tangible Example:
“That $38 an hour crew may realistically cost the business closer to like $55 or $60 per hour once it’s fully burdened. And that’s before the crew even starts producing revenue.”
— John Pajak [01:30] -
This calculation still excludes equipment costs, vehicle expenses, overhead, and desired profit.
Building Up to the True Hourly Cost of Doing Business
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Add to burdened labor rate:
- Equipment purchase/maintenance/depreciation
- Fuel
- Truck expenses and insurance
- Office and admin overhead
- Marketing and technology/software
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Result:
- Real hourly cost can easily hit $70–$80/hour or more
- After factoring in profit goals, many healthy businesses find they need to produce $150/hour in revenue to be sustainable (actual number will vary).
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Illustration:
“If your crews are averaging, say, $140 per hour, you’re losing money. If you’re only generating 140, you’re losing money... But if you’re making $180 an hour, now you’re making progress... You get your production rate to $200 an hour or more, then the business becomes healthy.”
— John Pajak [04:00]
Production Rate as a KPI: Beyond ‘Staying Busy’
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Why Track Production Rates?
- Helps spot “hidden” problem jobs/properties that eat into profit but blend into daily averages
- Enables proactive pricing, equipment, and staffing adjustments
- Moves your operation from “busy” to “profitable”
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Memorable Analogy:
“An underperforming property can easily hide inside a profitable route... it’s like you’ve got a dog hiding in there... But when you track the time at the property level, you could quickly identify which accounts are performing and which ones are dragging your production rate down.”
— John Pajak [07:00]
Actionable Strategies & Tools
1. Use Job-Level Tracking and Technology
- Track clock-in and clock-out times for each property
- Use job profitability reports in tools like Yardbook (John's recommended CRM since 2015)
- “I love using that report because it shows exactly which jobs are meeting our target hourly rate and which ones failed.” [09:15]
2. Diagnose Underperforming Accounts
- Look for reasons jobs fall short:
- Pricing errors (bid too low)
- Wrong or inefficient equipment
- Crew efficiency, training, or motivation issues
- Address by:
- Raising prices or re-bidding
- Upgrading/matching equipment to property
- Providing training or staff incentives
Three Action Steps to Take This Week
- Calculate Your True Hourly Break-Even Rate
- Don’t just use labor – include all equipment, overhead, and target profit.
- If you need help, consider workshops/coaching (John mentions his “Budgets, Break Evens, and Bottom Lines” workshop).
- Quote:
“You have goals in life... the things that you could achieve are solved by making profits. So you want to make sure you understand what your hourly break even rate is.”
— John Pajak [13:30]
- Track Production Rates for a Week
- More data is always better; even a week can reveal surprising patterns and hidden problems.
- “Even one week of data can reveal a ton about your operation.” [14:00]
- Identify & Fix Underperformers
- Figure out whether it’s a pricing, equipment, or crew issue—then fix it.
Notable Quotes & Memorable Moments
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On confusing busyness with profitability:
"It would have almost been better that you didn't even go out and work at all because you wouldn't have expended all those things."
[03:50] -
On the hidden dangers of daily averages:
“If you're only looking at the daily average, that problem property disappears inside the numbers... it's like you got a dog hiding in there.”
[07:00] -
On the importance of action:
“Your production rate, it's not just another number. You know, it's the KPI that reveals the truth. It definitely tells you if your crews are generating profit.”
[15:30] -
On tracking for insight and improvement:
"If you track it for like three weeks and you find out you're profitable, then you can kind of lay off it... But especially when you're just really trying to get things dialed in, if you track it every day, man, I'm telling you, it's gonna really... you're gonna see some differences."
[17:50]
Recommended Tools & Next Steps
- Yardbook CRM: For job profitability reporting and operational organization.
- 30-day free premium trial with promo code “PAYJACK”
- Coaching Opportunity: Small, focused group for deeper dives into numbers and operational strategy (three open seats).
Summary Table: Key Segments & Timestamps
| Segment | Timestamp | |-------------------------------------------------|------------| | Opening question: Profitable vs. busy? | 00:00 | | Calculating real labor cost | 01:30 | | Adding equipment, overhead, and profit | 03:00–05:00| | Why production rate matters | 05:00–07:00| | Using job-level profitability reports | 08:00–10:00| | Technology/tool recommendations | 10:00–12:00| | Three action steps for business owners | 13:30–16:00| | Closing insights and coaching pitch | 16:00–19:00|
Tone & Style
John Pajak’s delivery is direct, practical, and full of real-world examples. He mixes straightforward advice with warnings about common mistakes, personal experience, and some humor (“dog hiding in there”) to keep complex financial topics both accessible and urgent.
Key Takeaway
Tracking and understanding your production rate is the single most crucial KPI to ensure you’re actually making money, not just staying busy. By getting clear on your true costs, actively tracking performance by job, and quickly fixing underperformers, you move from feeling busy to building a reliably profitable business.