ALTAIROPERATING SYSTEM

Free calculator

Labor rate calculator

A technician's billed hour has to pay for more than the wage: payroll taxes and benefits, the paid hours nobody can bill, a share of the office, and the profit the business needs to keep. This calculator spreads all of it over the hours you actually bill.

Base hourly pay.

Payroll taxes, workers' comp, insurance and benefits as a % of wage.

Hours actually charged to customers.

Drive time, shop time, training, callbacks you do not charge for.

This technician's share of rent, office pay, vehicles, insurance, software.

Profit you want left after all costs, as a % of the billed rate.

Billable hourly rate

$120.19

About $121.00 rounded up to the next dollar.

Loaded hourly cost
$37.50
Paid hours per week
40.0
Weekly labor cost
$1,500.00
Weekly overhead
$1,384.62
Cost per billable hour
$96.15

How to use this

  1. Start with one technician, or an average across your crew.
  2. Enter the base wage and your labor burden. Your payroll provider or accountant can give you the burden percentage.
  3. Be honest about billable hours: count only hours that end up on an invoice. Drive, shop and training time go in non-billable.
  4. For overhead, divide your monthly overhead by the number of field technicians, or use the share you already allocate.
  5. Compare the result with the rate you charge today. If it is higher, look at billable hours and overhead before raising prices.

Assumptions

  • Overhead is converted to weekly using 52 weeks and 12 months per year.
  • Target margin is a share of the billed rate (a margin), not a markup on cost.
  • Materials are priced separately and are not part of this rate.
  • Hours are the same every week; seasonal swings are not modeled. Run it for your busy and slow seasons separately.
  • Default values are placeholders to show how it works, not industry benchmarks.

The formula

loaded hourly cost     = wage × (1 + burden %)
weekly labor cost      = loaded hourly cost × (billable + non-billable hours)
weekly overhead        = monthly overhead × 12 ÷ 52
cost per billable hour = (weekly labor cost + weekly overhead) ÷ billable hours
billable hourly rate   = cost per billable hour ÷ (1 − target net margin %)

Disclaimer. Estimates only. This calculator is for planning and education; it is not financial, tax or legal advice. Results depend entirely on the numbers you enter. Verify your figures and decisions with your accountant.