Deep-dive guide
Night Shift Electricity Versus Overtime Simulator: Cheaper Power or Cheaper Hours
Executive industry analysis
When orders exceed what the normal schedule can make, a factory has two broad ways to add hours. It can ask the existing crew to stay longer, which means overtime in the evening and on weekends, or it can build a regular night shift. The first looks easier because it needs no new roster. The second looks harder but can run on a cheaper electricity tariff and a lower premium. The right answer depends on the numbers, and most plants never put them side by side.
Overtime has costs that rarely appear in the quote for the order. The premium raises every hour above the base wage. The overtime usually falls in the evening or on weekends when some tariffs are higher. And tired crews work more slowly, make more mistakes, and cause more stoppages, so a share of every extra hour produces nothing. The simple count of hours then overstates what you will get, and the cost per productive hour is higher than the wage suggests.
The domino model follows the extra hours through the chain. The hours needed are reduced by fatigue to effective hours, which are divided into the cost of labour and power to give the cost per productive hour, which is compared with the contribution to give the output cover, and the last box shows the profit. A small rise in fatigue or in the peak tariff may not look serious in the first box but it can turn the last one red.
The iceberg separates the wage bill from the full cost of the extra hours. Above the waterline sit the base wages and the electricity at an off-peak price. Below it sit the overtime premium, the output lost to tired crews, the extra paid for peak-hour electricity and the cost of sick leave, turnover and supervision that comes with long hours. Use the simulator to see the point at which the extra hours stop paying and test whether a night shift would change that.
Formula and methodology blueprint
The model works on one month of extra production hours for a line run by a crew of six, drawing 180 kW. Effective hours are extra hours times one minus the fatigue loss. Labour is crew size times wage times extra hours times one plus the premium. Energy is hours times 180 kW times the peak tariff. An absence allowance of 4 percent of labour covers sick leave, turnover and supervision. Output is effective hours times contribution per hour.
- Effective hours
- Heff = hours × (1 − fatigue)
- Hours that actually produce good output after fatigue losses.
- Labour
- L = hours × 6 × wage × (1 + premium)
- Crew wages including the overtime or shift premium.
- Energy
- E = hours × 180 kW × peak tariff
- Electricity for the extra hours at the tariff in force.
- Output value
- O = Heff × contribution per hour
- The margin earned by the productive hours before labour and power.
- Net result
- Net = O − L − E − 4% × L
- The monthly profit of the extra hours; the breaking point is where it reaches zero.
- Night-shift plan
- tariff × 55%, premium ≤ 25%, fatigue × 0.8
- How Scenario B changes the inputs for a scheduled night shift.
Cascading elasticity
Contribution per hour and the fatigue loss act on the same output, so a point of fatigue costs about a point of contribution. Wage and premium multiply together, so a higher wage makes every premium point more expensive. Energy is the gentlest lever for a line of this size, but it is the one a night tariff changes most, which is why the plan helps even when the premium stays similar.
Three real-world case studies
Bootstrapped starter
A small plant adds a few weekend hours
A small plant adds forty overtime hours a month on a line with good margins, pays the usual premium and sees little fatigue. The cost is modest, so the month is positive, but the margin left is small. Loading it shows how few hours are needed before premium and power eat into a thin cushion.
Scaling mid-market
A busy season with a large order book
A large plant needs three hundred and twenty extra hours a month on high-margin products with moderate fatigue and a fair premium. The volume turns a modest per-hour profit into a large monthly gain. Loading it shows how the same hourly margin scales, and why the night tariff matters more with more hours.
Black-swan crisis
Exhausted crews at peak prices
Demand stays high, so crews work long overtime at double pay, fatigue takes nearly a third of the extra hours and the peak tariff rises sharply, while the margin per hour falls. Every extra hour now costs more than it earns. Loading it shows the loss and how a different schedule would change it.
Industry benchmark matrix
| Metric | Danger zone | Industry average | Top 10% elite |
|---|---|---|---|
| Overtime premium (typical contract range) | Above 75% | 25–50% | Below 25% |
| Productivity loss in long overtime weeks | Above 25% | 8–15% | Below 5% |
| Off-peak tariff as share of peak | Above 90% | 55–75% | Below 50% |
| Labour and power as share of output value | Above 95% | 70–85% | Below 65% |
| Absence and turnover uplift on overtime labour | Above 10% | 3–6% | Below 2% |
Variables and levers
Extra production hours per month
Hours the line must run beyond the normal schedule to meet demand, whether on overtime or a night shift.
Lever: Check that the extra hours have confirmed orders behind them, because unneeded hours still carry the full crew and power cost.
Contribution per productive hour
Margin the line earns per hour of good output before labour and energy are deducted.
Lever: Use the extra hours on your highest-margin products, since the premium is paid regardless of what the line makes.
Operator wage per hour
Base hourly wage of one operator; the line is run by a crew of six.
Lever: Cross-train staff so a smaller crew can cover the extra hours, and avoid paying a high wage for work that needs fewer people.
Overtime or shift premium
Percentage added to the base wage for working outside normal hours; legal and contract rules vary, so check yours.
Lever: Replace long overtime with a scheduled shift or a flexible-hours agreement that carries a lower premium, within your local labour rules.
Fatigue loss
Share of extra hours lost to slower work, mistakes, rework and stoppages caused by tired crews.
Lever: Cap consecutive overtime days and rotate crews, because fatigue losses grow sharply beyond a few long weeks.
Peak electricity tariff
Price per kilowatt-hour in the daytime or evening peak, when overtime normally runs; the line draws 180 kW.
Lever: Check whether your tariff has an off-peak or night rate and move the energy-heavy steps to those hours.
How to use this simulator
- 1Enter the extra hours you plan next month and the contribution per productive hour.
- 2Set the operator wage, the overtime premium and the peak electricity tariff from your payroll and bills.
- 3Estimate the fatigue loss from your own output records for long overtime weeks.
- 4Read the five domino boxes and press Find my breaking point to see what erases the profit.
- 5Compare with the night-shift plan in the Parallel universe tab over 24 months.
Mistakes to avoid
- Counting overtime hours as productive hours. Tired crews lose part of every long week, so the effective hours are fewer.
- Comparing only the premium and ignoring the tariff. A cheaper night rate can be worth more than a lower wage premium.
- Using the average tariff instead of the rate that applies in the hours you actually run.
- Adding hours without confirmed orders. Hours with no sale still cost the crew and the power.
Frequently asked questions
Is a night shift always cheaper than overtime?
No. It saves on energy and often on the premium, but it needs supervision, safety, transport and a stable roster. Compare the full cost, as the Scenario B tab does, before changing your schedule.
Why does fatigue appear as a lost share of hours?
Because tired crews work more slowly and cause more errors and stoppages. The model treats the loss as hours that cost wages and power but produce nothing.
Does the model include legal limits on working time?
No. Working-time, rest and night-work rules differ by country and contract, so check current rules and agreements before planning either option.
Why is the line modelled at 180 kW and six operators?
To keep the model readable. Scale the hours and the contribution per hour to your own line, so the labour and energy figures match your actual crew and power draw.
How do I find the point where overtime stops paying?
Press Find my breaking point. The tool pushes each input towards its worse end and reports the value at which monthly profit reaches zero, ranked by how close each lever is.
How accurate is this?
It is an educational model with simplified costs, not labour-law, energy or financial advice. Replace the inputs with your real payroll, tariff and output data.
This is an educational planning model with stated assumptions. It is not financial, tax or legal advice. Replace the inputs with your own figures and verify important decisions with a qualified professional.