Labor Rate Calculator For Contractors
Most shops bill a rate they inherited rather than one they calculated. Enter what a technician actually costs you, how many hours they really bill, and what your overhead runs — this calculator returns your break-even rate and the rate you need to hit your target profit.
Your Numbers
Taxes, comp, benefits, vehicle, phone, tools.
Share of paid hours that reach an invoice.
Rent, office staff, software, insurance, marketing.
Loaded wage
$37.80/hr
Wage plus burden
Billable hours per tech
1,352 hrs
Per year
Overhead per billable hour
$26.63
Break-even rate
$84.78/hr
Covers labor and overhead, zero profit
Recommended billable rate
$105.98/hr
At 20% net margin
Projected annual profit
$143,280.00
Across all technicians at full billable hours
How The Calculation Works
Your loaded wage is the base hourly wage plus burden. Multiply it by the paid hours in a year and you have the real cost of employing that technician — but you only get to bill a portion of those hours, so that full cost has to be recovered across the billable ones.
Overhead is then split per technician and spread across the same billable hours. Add the two and you have the break-even rate: the number at which the job costs you nothing and earns you nothing. The recommended rate divides break-even by one minus your target margin, which is how you build profit into the price rather than adding a percentage on top and hoping.
Why Shops Under-Price
The two mistakes are almost always the same: assuming a technician bills forty hours a week, and forgetting that overhead exists. A $28 wage feels like it justifies a $95 rate. Run it through the math with a realistic sixty-five percent billable efficiency and a normal overhead load, and the break-even alone can land above that number.
Frequently Asked Questions
- What is a billable hour efficiency and why does it matter?
- It is the share of paid hours that actually land on a customer invoice. Drive time, shop time, warranty callbacks, and training are paid but rarely billed. Most residential shops bill 55 to 75 percent of paid hours, and using 100 percent is the single most common reason a rate comes out too low.
- What should I use for labor burden?
- Burden is everything you pay on top of the wage: payroll taxes, workers compensation, health insurance, retirement, vehicle, phone, tools, and uniforms. Thirty to forty five percent of base wage is typical for residential trades, and vehicle-heavy trades sit at the high end.
- Is this the same as a flat rate price?
- No. This gives you the hourly rate your pricing must clear. A flat rate price book then converts that rate into per-task prices using standard task times, so the customer sees one price instead of a running clock.
- How often should I recalculate?
- At least once a year, and any time wages, insurance, fuel, or headcount move meaningfully. Shops that only revisit the rate when profit disappears are usually eighteen months behind their own costs.
Stop Rebuilding These Numbers By Hand
JobOpsPro keeps your rates, price book, estimates, and job costing in one system — $25 per user per month, every module included.