Labor burden calculator: your true hourly cost

An hour of labor costs more than the wage: payroll taxes, insurance and benefits come on top, and not every paid hour can be billed. Enter your own rates from your payroll and insurance paperwork to see the true cost of a billable hour. Nothing is saved or sent anywhere.

Hourly wage ($) Payroll taxes, % of wages (your rate) Workers' comp and liability, % of wages (your rate) Benefits and other labor costs per year ($) Paid hours per year Billable hours per year Target margin %

Payroll tax, workers' comp and insurance rates differ by state, trade, payroll size and insurer, so this page has no defaults to trust: use the rates on your own payroll reports and policies. Example numbers, not typical rates: replace every one with your own. Billable hours are the hours you can charge to customers, after travel, quoting, shop time and days off.

How it works

Wages per year = wage × paid hours. Payroll taxes and insurance = wages × (payroll tax % + comp and liability %). Total labor cost = wages + taxes and insurance + benefits. Cost per paid hour = total ÷ paid hours. Labor burden = (total − wages) ÷ wages. True cost per billable hour = total ÷ billable hours. Rate for your margin = true cost per billable hour ÷ (1 − margin).

Worked example (the values above): $25.00 × 2,080 hours = $52,000.00 of wages. 10% + 6% of that is $8,320.00, and $3,000.00 of benefits brings the year to $63,320.00. That is $30.44 per paid hour, a 21.8% labor burden ($11,320.00 ÷ $52,000.00). Only 1,700 hours can be billed, so each billable hour really costs $63,320.00 ÷ 1,700 = $37.25. To keep a 30% margin on labor, charge $37.25 ÷ 0.70 = $53.21 an hour (from the unrounded $37.2471).

Use your true cost per hour in the handyman pricing calculator and the job profit calculator. See also all calculators.