Labor pricing

Labor Rate
Calculator

Turn an hourly wage into a sustainable customer rate that covers burden, nonbillable time, overhead, and profit.

01
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.

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.