Labor cost calculator
Work out what the labor on a job really costs you, with payroll taxes, insurance and benefits included, and the labor price to put on your estimate. Below it, find what an employee costs per year and per billable hour.
Last updated · By Yasir Arfat
Labor cost calculator
Work out the labor cost of a job from crew size, hours and wages, then the labor price to quote.
- Total labor hours
- 32
- Wages
- $896.00
- Labor cost with burden
- $1,164.80
- Labor price to quote
- $1,630.72
- Billed rate per hour
- $50.96
Labor burden is what each hour costs you on top of the wage: payroll taxes, workers' comp, insurance and benefits. 25-40% is common; use the employee cost calculator below for your own figure.
Put the labor on an estimate →Employee cost calculator
See what an employee really costs per year and per hour once payroll taxes, insurance and benefits are added.
- Wages per year
- $52,000
- Total cost per year
- $66,320
- Labor burden
- 27.5%
- Cost per billable hour
- $39.86
US payroll taxes are about 7.65% (Social Security and Medicare) plus federal and state unemployment. Workers' comp rates depend on your state and trade. Paid holidays and time off lower billable hours.
Contractor labor rate calculator
Turn a crew member's wage into the hourly rate to bill customers, with labor burden, overhead and profit.
- Billing rate per hour
- $50.23
- Loaded labor cost per hour
- $36.40
- Gross profit per hour
- $13.83
Labor burden covers payroll taxes, workers' comp, insurance and benefits on top of the wage. Use your own figures; they vary by state and trade.
The labor cost formula
Labor cost = total hours × hourly wage × (1 + labor burden %). Total hours is workers × hours each. With two workers on a 16-hour job at $28 an hour and 30% burden: 32 hours × $28 = $896 in wages, plus $268.80 burden, is a labor cost of $1,164.80.
Labor price = labor cost × (1 + markup %). A 40% markup on that job quotes $1,630.72 for labor, about $51 per crew hour. The markup pays for overhead (vehicles, tools, insurance, office) and profit.
What goes into labor burden
- Employer payroll taxes: in the US, 7.65% for Social Security and Medicare, plus federal and state unemployment tax.
- Workers' compensation: set by state and trade class; roofing and framing cost much more than office work.
- Insurance and benefits: health insurance, retirement contributions and any other benefits you pay.
- Paid time off: holidays, vacation and sick days are paid but not billable, so they raise the cost of every billable hour.
- Non-billable time: travel between jobs, loading, cleanup and training. The employee cost calculator's billable share accounts for this.
Labor cost vs labor rate
| Labor cost | Labor rate (billing rate) | |
|---|---|---|
| What it is | What an hour of work costs you | What you charge the customer per hour |
| Includes | Wage + payroll taxes, insurance, benefits | Labor cost + overhead + profit |
| Used for | Job costing, knowing your break-even | Estimates, quotes and invoices |
Putting labor on an estimate
Once you know the labor price, list it on your estimate as hours × rate, with materials in a separate table. Use the markup calculator for materials, the hourly rate calculator to set a standard billing rate, and the drywall calculator or other trade calculators to measure the job. When the work is done, turn the estimate into a contractor invoice in one click.
Questions about labor cost
How do you calculate labor cost?
Multiply the total labor hours by the hourly wage, then add labor burden (payroll taxes, workers' comp, insurance and benefits). For a job: workers × hours each × wage × (1 + burden %). Two workers for 16 hours each at $28 an hour with 30% burden cost $1,164.80.
What is labor burden?
Labor burden is everything an employee costs you on top of their wage: employer payroll taxes, unemployment insurance, workers' compensation, health and other benefits, and paid time off. It is usually given as a percentage of wages, often between 25% and 40% for trades.
What is the difference between labor cost and labor rate?
Labor cost is what the work costs you: wages plus burden. Labor rate is what you charge the customer per hour, which adds overhead and profit on top of the cost. If a crew hour costs you $36 and you bill $65, the difference pays for overhead and profit.
How do I calculate labor cost percentage?
Divide total labor cost by revenue and multiply by 100. If a job brings in $5,000 and the labor cost is $1,500, labor is 30% of revenue. Track it per job to see which work is most profitable.
How much markup should I add to labor?
Enough to cover your overhead and leave a profit. Many contractors add 30-60% to burdened labor cost, depending on their overhead and market. Work out your overhead first; the markup calculator shows what each markup means as a margin.
Should I show labor separately on an estimate?
It often helps. Listing labor and materials separately shows the customer what they are paying for and makes changes easier to price. Show your billed labor price, not your wage or burden.
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