Labor pricing

Contractor Labor Rate
Calculator

Build a contractor hourly labor rate from wage, labor burden, paid hours, billable utilization, overhead, and target margin. The result separates burdened cost, break-even rate, and the customer rate needed for profit.

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Enter your assumptionsBuild the labor rate
The employee's regular hourly wage before employer costs.
Employer payroll taxes, workers' compensation, insurance, and benefits as a percentage of wage.
The annual share of office, vehicles, software, rent, and other overhead this worker's labor must recover.
2,080 represents 40 paid hours per week for 52 weeks.
The share of paid hours actually chargeable to customers after travel, training, estimating, meetings, and downtime.
The percentage of the final labor rate retained as profit after the included labor and overhead costs.
Why wage is not your rate

Every billable hour must carry the hours you cannot bill.

An employee's wage is only the starting point. Payroll taxes, insurance, benefits, paid leave, travel, training, estimating, office time, vehicles, software, rent, and administration still have to be paid. Use the Labor Burden Calculator to calculate the employee cost before adding overhead and profit.

Paid hours2,080
70% utilization70%
Billable hours1,456

A rate based on all 2,080 paid hours will underrecover costs when only 1,456 hours can be invoiced.

Learn how to calculate a contractor labor rate

Once work is complete, use job-level cost tracking to compare the labor hours and cost actually consumed with the estimate.