CalcRuvo

Labor Burden & Billable Rate Calculator

Find the true annual cost of an employee and the hourly rate you need to bill to cover it, your overhead, and your target profit.

General ContractingElectricalPlumbingHVACConcrete
Wages & hours

Wages & hours

Paid hours include holidays and paid time off. Billable hours are the hours you can actually charge customers for.

$/ hr
hrs / yr

Full-time is typically 2,080 (40 × 52).

hrs / yr

Exclude drive time, shop time, training and callbacks you can't bill.

Employer costs

Employer costs

Annual amounts you pay on top of wages.

Employer payroll taxes
%

Employer Social Security, Medicare, FUTA and SUTA combined.

$/ yr

Only the share attributable to this worker.

$/ yr

Health, retirement match, etc.

$/ yr

Training, uniforms, tools, licensing for this worker.

Overhead & margin

Overhead & margin

Don't include anything here that you already entered above.

$/ yr

This worker's share of office, vehicles, software, admin.

%

Profit as a % of the billing rate (0 – 99.99).

What this calculator does

A technician paid $28 an hour costs you far more than $28 for every hour you can bill. Payroll taxes, insurance, benefits, and unbillable time all add up. This calculator finds the true annual cost of an employee, spreads it over the hours you can actually invoice, adds their share of overhead, and sets a billing rate that earns your target margin.

Inputs explained

  • Base hourly wage and annual paid hours — what the employee earns and how many hours you pay for each year, including PTO and holidays.
  • Payroll taxes — the employer share, as a percentage of wages or a yearly dollar amount.
  • Workers' comp & insurance, benefits, other expenses — yearly dollar amounts tied to employing this person.
  • Annual billable hours — hours you can actually charge for. This is usually well below paid hours.
  • Allocated overhead — this worker's share of business costs that aren't employment costs (office, vehicles, software, admin staff).
  • Desired profit margin — profit as a percentage of the billing rate.

Formulas

  1. Annual wages = hourly wage × paid hours
  2. Employment cost = wages + payroll taxes + insurance + benefits + other
  3. Employment cost per billable hour = employment cost ÷ billable hours
  4. Break-even rate = (employment cost + overhead) ÷ billable hours
  5. Billing rate = break-even rate ÷ (1 − margin)
  6. Profit per billable hour = billing rate − break-even rate

Each cost appears in exactly one input, so nothing is double-counted. Keep employment costs out of the overhead figure.

Worked example

A service technician earns $28/hr for 2,080 paid hours and bills 1,500 hours a year.

  • Wages: 28 × 2,080 = $58,240
  • Payroll taxes at 9%: $5,241.60
  • Plus $4,200 insurance, $6,000 benefits, $2,500 other: employment cost $76,181.60
  • Per billable hour: $76,181.60 ÷ 1,500 = $50.79
  • With $18,000 overhead: $94,181.60 ÷ 1,500 = break-even $62.79/hr
  • At a 20% margin: $62.79 ÷ 0.80 = $78.48/hr, earning about $15.70 per billable hour

Use "Load example values" above to see these numbers in the calculator.

Assumptions

  • All figures are annual and in US dollars.
  • Billable hours are realistic and already account for downtime, travel, training, and callbacks.
  • Overhead is your best estimate of this worker's share, for example total overhead divided by the number of billable employees.

Limitations

  • These are cost-based minimum rates, not guaranteed market prices.
  • It doesn't model overtime premiums, seasonal hiring, or tax rates that change mid-year.
  • It doesn't give tax or legal advice. Confirm payroll tax and workers' comp rates with your accountant or insurer.

Frequently asked questions

What is labor burden?+

Labor burden is everything you pay to employ someone beyond their wage: employer payroll taxes, workers' compensation, insurance, benefits, and other employment costs. It is often 20–40% of wages, but it varies widely by trade, state, and benefits package, so use your own numbers.

Why divide by billable hours instead of paid hours?+

You pay for every hour on the clock, including holidays, drive time, and shop time, but you can only recover that cost from hours you invoice. Spreading the full annual cost over billable hours shows what each sold hour must cover.

Should I send the rate with or without overhead to Job Pricing?+

Employment cost only is the recommended choice: it carries no overhead, so you keep using Job Pricing's overhead input normally. The overhead-inclusive rate already contains this worker's allocated share of business overhead; if you use it, reduce Job Pricing's overhead by the overlapping portion rather than assuming it should be zero, since a job can still have overhead not covered by the labor rate. The billing rate is never transferred, because it includes profit and is not a cost.

Is the recommended billing rate what I should charge?+

It's the minimum rate that covers your costs and earns your target margin. Your market may support more — or less. If competitors charge less than your break-even rate, the fix is usually higher utilization or lower overhead, not a lower price.

What if my worker is salaried?+

Divide the annual salary by annual paid hours to get an equivalent hourly wage, then enter that with the same paid hours.

Results are estimates for planning purposes. See our disclaimer.

Related calculators