Security: a post needs 4.29 people, not three

“Fourteen sites, for a round-the-clock post they pay me 108 000 ₴, and I will tell you from memory how much is left on it: forty-six and a half thousand. That is what I believed for six years. And what is left is 2 832 ₴” — that is how Mykola Tkach, owner of a security company in Zhytomyr, opened the conversation.

This arithmetic is familiar to anyone who keeps posts on client sites. A round-the-clock post means three shifts, so three guards. Multiply the wage by three, subtract it from the rate, the difference is mine.

The count breaks in one place. A post is counted in people but sold in hours. Three guards do not cover a round-the-clock post: it holds 720 hours a month, and one guard's norm is 168. The gap is closed every month by the overtime sheet, and that is exactly where the money Mykola never once saw is sitting.

Below we break a security company down into two units — the post and the post hour — and we get to why a post at 108 000 ₴ brings in less than a post at 56 000 ₴.

Mykola's road: from two sites to fourteen

Mykola started with two warehouses out on the ring road. He stood the shifts himself when somebody failed to turn up, and he drove out to talk with the tenants himself. He did the maths on his phone: this many rates, this many wages, the rest is mine.

Seven years on there were fourteen sites. A control room appeared, a supervisor with a car, a separate person for paperwork and licences. That is when the feel for the numbers went: the number of posts grew sevenfold, revenue came along behind them, and the profit stayed where it had been in the second year.

“When there were two posts, I held the whole week's rota in my head and knew who was covering for whom. Now the timesheet reaches me already closed, with the overtime total at the bottom. I sign it and I do not ask which post it came from.”

Why “fourteen sites” says nothing about the money

A site in security is not a one-off job but an obligation to keep the post filled without a single hole. The client is not paying for people and not for shifts: he is paying for someone always standing at the entrance.

The only way to measure that is in hours. A round-the-clock post is 720 hours a month; a day post of twelve hours is 360. The person, meanwhile, arrives with a norm of their own: 168 hours, and that norm does not stretch.

While all fourteen contracts lie in one list headed “sites under service”, the simplest question stays unanswered: which post feeds the company and which one quietly eats it for a bigger rate.

How Mykola counted a post: three shifts — three guards

A guard's rate is 100 ₴ an hour. The monthly norm is 168 hours; with 22% employer taxes an hour comes to 122 ₴ and a person to 20 496 ₴ a month. Three people for three shifts — 61 488 ₴.

Then one operation: 108 000 ₴ of rate minus 61 488 ₴ of wages. Forty-six and a half thousand off the post. That is the figure Mykola quoted when deciding whether to take a site, and that is the one he held in his head while signing a rate for a year ahead.

There is no mistake here in the hourly rate or in the tax percentage. The mistake is that three guards on a round-the-clock post do not exist.

Fourteen posts on one page

Here is the month out of which Mykola made every decision. Nine sites under round-the-clock guard and five with a day shift of twelve hours.

Post type	Count	Hours a month	Rate per post
Round-the-clock	9	720	108 000 ₴
Day, 12 hours	5	360	56 000 ₴
Total	14	8 280	1 252 000 ₴

Nine posts at 720 hours and five at 360 — together 8 280 hours of guarding a month and 1 252 000 ₴ of revenue. Everything else in this article follows from those two numbers.

Life before the post hour became a line

The bookkeeping Mykola lived in through those years will be recognised by any security company that has grown out of a handful of sites.

• A post was counted in people. Three shifts — three guards, and nobody ever checked that multiplication against hours.
• Overtime was seen as one figure on the payroll. The sum was there; which post it came from was not.
• Rates were set by analogy. A new site was priced off the neighbouring contract, because “it is roughly the same over there”.
• The control room and the supervisor lived in “general costs”. That money never reached a specific post.
• Holidays and sick leave were covered as they came. Whoever was free stood the shift, and nobody added up what it came to over the month.
• Day posts were treated as small change. Half the rate — so half the conversation.

Not one of these six points is about security. The guards came out for their shifts, alarms were worked, clients did not leave. All six points were sitting in the bookkeeping — and nobody looks into the bookkeeping while standing a post.

The main unit: not the guard but the post hour

The guard is the unit you pay in. The post hour is the unit you sell in. Until the two stand in one line, the cost of a post is invented by multiplying a wage by the number of shifts.

A post hour does not depend on who exactly is standing in it: the post is either covered or it is not, and for every covered hour the client pays under the contract.

Why 720 divided by 168 is 4.29

Take the 720 hours of a round-the-clock post and divide them by the 168 hours of one guard's norm. You get 4.29. That is how many norms of working time one post eats in a month.

And here is where it parts ways with three shifts. A shift is a stretch of the day; a norm is the line past which a person's hour gets more expensive. A day does divide into three shifts, but a post's month does not divide into a guard's norm evenly at all.

Four point two nine is not a person

The 4.29 coefficient does not mean the payroll has to carry a fractional number of guards. On the payroll people are whole, and there are only two options: keep four on the post and buy the remainder in overtime, or put a fifth one on and do without overtime altogether.

Mykola lived in the first option for six years without even knowing it was the first of two. The gap between three guards and 4.29 does not disappear because no report shows it: every month it is closed with hours at time and a half.

“They tell me a post needs four point two nine of a guard. I ask: and where do I get twenty-nine hundredths of a person? I did not like the answer: those twenty-nine hundredths I have been buying with overtime for six years already, just on a different line.”

An overtime hour costs 183 ₴

A guard's ordinary hour with taxes is 122 ₴. Overtime is paid at time and a half, which is 183 ₴. That is the price at which the gap between the payroll norm and the post's hours gets closed.

On the payroll these hours are not broken out: they lie together with all the others. So the owner sees a larger wage total, puts it down to “people worked extra” — and goes on counting the post as three norms, although what he pays for is no longer them.

What a post really costs

Mykola has four guards assigned to a round-the-clock post and two to a day post. Let us put the two types of post side by side and break each one down into norm and overtime.

Figure for the month	Round-the-clock	Day
Guards on the payroll per post	4	2
Hours within the norm (168 × guards)	672	336
Post hours a month	720	360
Overtime hours	48	24
Norm at 122 ₴	81 984 ₴	40 992 ₴
Overtime at 183 ₴	8 784 ₴	4 392 ₴
Direct costs	90 768 ₴	45 384 ₴
Share of fixed costs (20 ₴ an hour)	14 400 ₴	7 200 ₴
Rate	108 000 ₴	56 000 ₴
Profit from the post	+2 832 ₴	+3 416 ₴
Profit per hour	3.93 ₴	9.49 ₴

The direct costs of a round-the-clock post are 90 768 ₴, not the 61 488 ₴ Mykola held in his head. And the twenty-four overtime hours in the day post column are not about round-the-clock cover: they are the remainder that did not fit into two norms.

Why a round-the-clock post at 108 000 ₴ earns less than a day post at 56 000 ₴

This is not a typo in the table. The more expensive post really does bring in less: 2 832 ₴ against 3 416 ₴ a month.

The mechanism shows up if you add two day posts together. You get the same 720 hours, the same payroll structure, the same costs down to the last kopiyka: 90 768 ₴ direct and 14 400 ₴ fixed. And the rate on two day posts together is 112 000 ₴ against 108 000 ₴ for one round-the-clock. That four-thousand difference is what eats most of the earnings, because the earnings there are only 3 416 ₴ off a post.

Profit per hour: 3.93 ₴ against 9.49 ₴

Divide a post's profit by its hours. Round-the-clock: 2 832 ₴ over 720 hours — 3.93 ₴ an hour. Day: 3 416 ₴ over 360 hours — 9.49 ₴. Per hour the day post is better by 2.41 times.

For six years Mykola fought for round-the-clock sites and passed on the day ones, because the cheque on them was “not serious”. The choice in fact stood not between 108 000 ₴ and 56 000 ₴ but between 3.93 ₴ and 9.49 ₴ an hour.

“I turned down two business centres with daytime guarding: fifty-six thousand against a hundred and eight — what is there to count. Now I see that every time I picked the worse hryvnia per hour and was pleased with myself for taking the bigger site.”

Fixed costs: 20 ₴ on each of the 8 280 hours

Beyond the guards on the posts, the company carries every month the things without which the posts do not work.

• The control room. It takes alarms from every site and does not switch off for an hour.
• The supervisor and the car. Driving round the posts, going out to alarms, bringing in cover.
• Office and paperwork. Contracts, timesheets, reporting, personnel.
• Licences and permits. Payments that do not depend on the number of sites.
• Uniform and kit. It wears out regardless of how many alarms there were in the month.

Together that is 165 600 ₴ a month. Divide it by 8 280 hours of guarding — exactly 20 ₴ an hour. A round-the-clock post takes 14 400 ₴ out of that sum, a day post 7 200 ₴.

What the company earned over the month

Let us add the month up in full. Revenue — 1 252 000 ₴. Direct costs across the posts: nine times 90 768 ₴ plus five times 45 384 ₴ — that is 1 043 832 ₴. Fixed — 165 600 ₴. Profit: 1 252 000 − 1 043 832 − 165 600 = 42 568 ₴, margin 3.40%.

The check works from the other side too: nine posts at 2 832 ₴ plus five at 3 416 ₴ give the same 42 568 ₴. Nothing appeared and nothing vanished — the profit was simply laid out by post for the first time instead of by company.

Three and four tenths of one per cent is not a property of the security business and not the market. It is the proportion in which honest work and a price set by the old arithmetic got mixed together.

Hidden item one: 552 hours of overtime

Add up the overtime across all the posts: nine at 48 hours and five at 24 — that is 552 hours a month. At 183 ₴ they come to 101 016 ₴, that is 2.37 times more than the company's entire profit.

But look at the premium on its own. If those same 552 hours went at the ordinary 122 ₴, they would cost 67 344 ₴. The payment for overtime as such is 33 672 ₴ a month, which is 79.1% of profit.

“They showed me a line: overtime premium — 33 672 ₴ a month. That is almost eighty per cent of what I take home. I paid that bonus for six years and never once saw it as a separate figure, because on the payroll it is mixed in with ordinary hours.”

Hidden item two: the gap between three guards and 4.29

Now let us price the mistake itself. Three guards on a round-the-clock post is 61 488 ₴. The real direct costs of that same post are 90 768 ₴. The difference is 29 280 ₴ a month on every post where Mykola believed he was keeping three norms.

There are nine such posts. Together that is 263 520 ₴ a month, that is 6.19 times more than the profit. For six years every new round-the-clock contract was signed with that gap inside it, and a bigger rate only made it bigger.

Why 263 520 ₴ cannot be subtracted from the profit

The commonest mistake after a calculation like this is to add 263 520 ₴ to costs or subtract it from profit. That must not be done, otherwise on paper the company turns deeply loss-making, which it is not.

This money has not gone anywhere and nothing new has appeared: it is already sitting inside the 1 043 832 ₴ of direct costs. The company's costs were and remain 1 043 832 ₴, the profit 42 568 ₴. The same goes for overtime: the 101 016 ₴ is inside that sum too, and there is no need to subtract it separately.

What is the figure for, then? It measures not a cost but the error in the owner's head. 263 520 ₴ is the size of the gap between the post as Mykola imagined it and the post he was paying for every month.

Four reserve guards instead of overtime

The first decision required neither a new contract nor a change of rate. 552 hours of overtime is 3.29 norms. So a small relief crew covers them entirely, and with room to spare.

How to cover 552 hours	With overtime	With a reserve crew
Hours covered	552	672
Price of an hour	183 ₴	122 ₴
Cost a month	101 016 ₴	81 984 ₴
Spare for holidays and sick leave	—	120 hours
Difference a month	—	19 032 ₴
Against the 42 568 ₴ profit	2.37 times more	44.7% saved

Four reserve guards give 672 hours of norm for 81 984 ₴ against 101 016 ₴ of overtime. The saving is 19 032 ₴ a month, that is 44.7% of profit, and another 120 hours are left over for holidays and sick leave, which used to be covered with overtime as well.

Two different fours, and they must not be confused

A four stands in this article twice, and it is about different things. The four guards in the table above are people assigned to one round-the-clock post; they give 672 hours of norm on that site. The four reserves are a separate relief crew for the whole company, tied to no post, going wherever hours are short.

Do not be surprised that 81 984 ₴ turns up in two places. It is one and the same calculation: four norms of 168 hours at 122 ₴.

A fifth guard on the post: when he is cheaper than overtime

The 4.29 coefficient rounds up to five. A fifth guard on a round-the-clock post covers it completely, without a single overtime hour — and that is the second of the two options spoken of above. Here the figure five means a person on a post, not the five day sites from the first table.

Why Mykola did not take that road. A fifth is needed on every round-the-clock post separately, and part of his norm on that site stays unclaimed. A reserve crew of four covers those same 552 hours across the whole company and still holds 120 hours in spare — the same task is solved with fewer norms.

“I would not hire people to sit in reserve, on principle: better to pay my own for overtime than keep somebody without a post. I did the maths — four reserves cost 81 984 ₴, overtime 101 016 ₴. It turned out that the spare capacity is cheaper than my saving on spare capacity.”

What changed once the post hour became a line

Three changes came out of it on paper. Every post got its own hours — 720 or 360 — and a coverage coefficient next to the rate. Overtime stopped being a lump sum and started being allocated across posts. And every new site now goes through a check in hours, not in shifts, before signing.

• Overtime was replaced by a relief crew. 81 984 ₴ instead of 101 016 ₴ — 19 032 ₴ a month, or 44.7% of profit, without a single new contract.
• Day posts stopped being small change. 9.49 ₴ against 3.93 ₴ of profit per hour — 2.41 times, and now such sites are fought for rather than turned down.
• The rate is calculated before signing. 4.29 guards on a round-the-clock post and 90 768 ₴ of direct costs — two figures you take into negotiations beforehand, not a year after them.

No new sites, no price rise across the portfolio, no cutting of people were needed. What was needed was to see the post hour as a line with a price of its own.

The takeaway for business owners. If you sell continuous presence — security, a control room, a shift on a line — then the unit you invoice in and the unit you hire people in do not match. Divide the hours of your obligation by one employee's norm and look at the result without rounding it up to a whole number in your head. The difference between that figure and the headcount you are used to putting out is already paid for — just at the price of time and a half. Any business with a rota works the same way: three-shift production, a support desk, a delivery line.

Parting advice

• Count a post in hours, not in shifts. 720 hours over 168 is 4.29 guards, and no multiplying of a wage by three will show you that.
• Put the price of a post hour next to the rate. Two figures in one line find an underpriced contract in ten minutes.
• Break overtime out on a separate line for every post. 552 hours at 183 ₴ is 101 016 ₴, 2.37 times more than the company's profit.
• Count the overtime premium separately from the hours themselves. 33 672 ₴ against 67 344 ₴ at the ordinary price — it is the premium, not the hours, that eats 79.1% of the earnings.
• Spread fixed costs across the hours. 165 600 ₴ over 8 280 hours is 20 ₴, and without those 20 ₴ a post will always look more profitable than it is.
• Compare posts by profit per hour, not by rate. 3.93 ₴ and 9.49 ₴ — the same company, and the bigger cheque stands on the worse figure.
• Before raising a rate, cost out a relief crew. Four reserve guards at 81 984 ₴ delivered 19 032 ₴ of saving — more than any negotiation that month.

The money does not vanish — you simply do not see it

People think security comes down to two things: reliable people and a rate you did not undersell. Without those you really cannot start. But what decides the earnings is a third — how many norms of working time your obligation to keep a post covered amounts to, and at what price you buy the difference.

This hole does not close over by itself and will not show up in the bottom line: the line totals the month, while the error is written into every contract separately. Yet the moment the post hour gets a price, the main thing becomes visible: the 3.40% margin belongs neither to round-the-clock posts nor to day ones. It is the average between a post earning 9.49 ₴ an hour and a post that, for twice the rate, earns 3.93 ₴.

How to see this in your own company

Everything described above rests on one table: each post is a row where the post's hours, the hours of the norm and whatever covers the difference stand side by side. While wages are reduced to a single payroll fund, you see neither the coverage coefficient nor the fact that overtime is bigger than profit. When the same data is collected automatically, you see which post pays for itself and which does not — which is exactly why small and medium business owners use Finmap: to see the financial picture instead of reconstructing it after the fact.

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Topic foundation: Management Accounting Explained: What It Is and Why Owners Need It