Labor Cost Calculator

Estimate labor cost or back-solve hours, hourly rate, or crew size — with optional overtime and burdens — using consistent units and step-by-step math.

Practical Guide

Labor Cost Calculator: Fast, Accurate, and Fully Burdened

Learn how to turn base wages into fully burdened labor costs, compare methods, and avoid the most common mistakes when pricing work. This guide mirrors the calculator directly above so your estimates stay consistent and defensible.

8–12 min read Updated November 10, 2025

Quick Start

  1. 1 Enter each role’s base wage and expected hours (normal and overtime). If you bid by crew, add each role separately.
  2. 2 Add burdens you actually incur: payroll taxes, benefits/fringe, and overhead. Use either % of wage or $/hour if that’s how you track them.
  3. 3 Set overtime rules (multiplier and hours) and any shift differential or per-diem if applicable.
  4. 4 Apply a realistic productivity factor (utilization/inefficiency) to account for setup, travel between tasks, rework, and site constraints.
  5. 5 Review the fully burdened hourly rate and job total. If you price work to a margin, convert cost to a billing rate.

Tip: Start with your last three similar jobs. Average the actual burdened hours to set a realistic productivity factor.

Watch-out: Don’t double count overhead. If overhead is applied as a % in the rate, don’t add it again as a job-level markup.

Variables & Symbols

  • \(r\) Base wage (per hour)
  • \(b_t\) Payroll tax burden (fraction)
  • \(b_f\) Fringe/benefits burden (fraction)
  • \(b_o\) Overhead burden (fraction) or \(\$ / \text{hr}\)
  • \(h_n\) Normal hours
  • \(h_o\) Overtime hours
  • \(m\) OT multiplier (e.g., 1.5×)
  • \(p\) Productivity factor (e.g., 1.10 = +10% hours)
  • \(g\) Target gross margin (fraction)
\[ \textbf{Weighted Base Rate} \; r_w \;=\; \frac{h_n\cdot r + h_o\cdot (m\cdot r)}{h_n + h_o} \] \[ \textbf{Loaded Hourly Rate} \; R_L \;=\; \begin{cases} r_w \cdot \big(1 + b_t + b_f + b_o\big), & \text{if overhead is \%}\\[4pt] r_w \cdot \big(1 + b_t + b_f\big) + b_o^{\$/h}, & \text{if overhead is \$ per hour} \end{cases} \] \[ \textbf{Job Cost} \;=\; \Big(\sum_i h_i \cdot R_{L,i}\Big)\cdot p \qquad\qquad \textbf{Billing Rate (at margin \(g\))} \;=\; \frac{R_L}{1-g} \]

Choosing Your Method

Method A — Loaded Hourly Rate

Compute a fully burdened rate for each role, then multiply by hours.

  • Simple and fast; ideal for T&M and change orders.
  • Easy to compare crews and subcontract options.
  • Aligns with payroll reporting.
  • Can hide inefficiencies if hours are optimistic.
  • Requires disciplined burden tracking.
Cost ≈ \(R_L \times \text{hours}\)

Method B — Task-Based Time & Motion

Estimate hours per task/quantity (setups, travel, clean-up), then price with rates.

  • Transparent; improves future estimates.
  • Highlights bottlenecks and rework risk.
  • More effort up front; needs historical data.
  • Easier to over-detail on small jobs.
Cost ≈ \(\sum (q_k \times t_k) \times R_L\)

Key Cost Drivers

Wage & crew mix

Rates vary by craft and experience. A small change in crew composition often beats a small discount on wages.

Payroll taxes & benefits

Employer-paid taxes, insurance, retirement, and PTO add materially to the wage.

Overhead allocation

Tools, vehicles, small equipment, training, admin, and QA. Decide: percent of wage or flat $/hour—don’t do both.

Overtime profile

Even a few OT hours at 1.5× can shift the weekly weighted rate. Model realistic schedules.

Productivity/inefficiency

Access, weather, site rules, rework risk, and learning curve. Use factors from similar jobs.

Travel & differentials

Per-diem, travel time, shift premiums, hazard pay—these are real costs that belong in the rate.

Worked Examples

Example 1 — U.S. Carpenter (weekly mix of straight time and OT)

  • Base wage \(r\): \$28/hr
  • Hours: \(h_n = 40\) normal, \(h_o = 4\) OT at \(m = 1.5\)
  • Payroll tax \(b_t\): 10%
  • Benefits \(b_f\): 18%
  • Overhead \(b_o\): 15% (applied as percent)
  • Productivity factor \(p\): 1.06 (6% inefficiency)
1
Weighted base: \(r_w = \frac{40\cdot28 + 4\cdot(1.5\cdot28)}{44} = \frac{1120 + 168}{44} \approx \$29.27/hr\)
2
Loaded rate: \(R_L = 29.27 \times (1+0.10+0.18+0.15) = 29.27 \times 1.43 \approx \$41.85/hr\)
3
Job cost for 120 field hours: \(120 \times 41.85 \times 1.06 \approx \$5{,}322\)
4
Billing rate at 30% margin: \(\frac{41.85}{1-0.30} \approx \$59.79/hr\)

If your overhead is \$4.50/hr instead of a %, replace the overhead term with \(+4.50\) in the loaded rate formula.

Example 2 — EU Technician (€/h with flat overhead)

  • Base wage \(r\): €20/hr
  • Hours: \(h_n = 36\) normal, \(h_o = 0\) (no overtime)
  • Payroll tax \(b_t\): 22%
  • Benefits \(b_f\): 12%
  • Overhead: €3.50/hr (flat)
  • Productivity factor \(p\): 1.12 (complex site)
1
Weighted base: \(r_w = 20.00\) (no OT)
2
Loaded rate: \(R_L = 20 \times (1+0.22+0.12) + 3.50 = 20 \times 1.34 + 3.50 = €30.30/hr\)
3
Job cost for 80 hours: \(80 \times 30.30 \times 1.12 \approx €2{,}715\)

When comparing suppliers, normalize to the same assumptions for overhead and productivity.

Common Variations & Their Impact

Different employment models and site rules can change your burden by double-digits. Use this table to sanity-check the calculator inputs.

ScenarioWhat ChangesImpact on Cost
Union vs. Non-UnionBenefits/fringe and wage rates follow agreements.Higher predictable fringe; less variance. Make sure your \(\,b_f\)\ matches the agreement.
Prevailing Wage / Certified PayrollMinimum wage + specified fringe; strict reporting.Enter fringe exactly; overhead may rise due to admin time.
W-2 Employees vs. 1099/SubcontractWho carries taxes/benefits and overhead?If subcontract, your rate might already be “loaded.” Avoid re-loading.
Shift Differential / Hazard PayPremium on base or a flat hourly adder.Add to \(r\) or treat as \(\$ / h\) overhead to reflect true cost.
Travel, Per-Diem, MobilizationPaid travel hours and daily allowances.Convert to \(\$ / h\) adders or separate line items; don’t ignore.
Equipment-Inclusive CrewsSmall tools vs. owned equipment in the rate.Either increase \(b_o\) or keep equipment as a separate cost code.
  • Pick one overhead approach: percent or \(\$ / h\).
  • Model a realistic overtime pattern, not just a single multiplier.
  • Use recent actuals for productivity factor \(p\).
  • Keep burdens by craft to avoid crew-mix distortion.

Practicalities, Logistics & Sanity Checks

Selection Criteria

  • Data quality: Do you have current wage tables, benefit rates, and insurance?
  • Consistency: Are burdens applied the same way across jobs?
  • Traceability: Can you tie the rate back to payroll and GL accounts?

Operational Tips

  • Track time by cost code to refine task-based hours.
  • Review weekly: actual \(r_w\), OT hours, and unproductive time.
  • Keep a rate sheet per craft/region with effective dates.

Standards & Compliance

  • For regulated or public work, align with the specified wage/fringe schedule.
  • Document how you computed burdens; auditors look for double counting.
  • This guide is informational only—verify local labor rules and contracts.

If your pricing is margin-based, use the calculator’s billing-rate conversion to ensure your target gross margin \(g\) matches the loaded cost reality.

Frequently Asked Questions

What is a fully burdened labor rate?
It’s the hourly cost of labor including employer-paid payroll taxes, benefits/fringe, and overhead (plus any premiums like shift or hazard). The calculator computes this as the Loaded Hourly Rate.
Should overhead be a percent or dollars per hour?
Use whichever mirrors your books. If overhead scales with wages (admin tied to headcount), a percent makes sense. If it’s more fixed (vehicle lease, small tools), a flat \(\$ / h\) is cleaner. Don’t use both at once.
How do I price overtime correctly?
Model the pattern of OT (hours at 1.5× or 2×) to get a weekly weighted base rate, then apply burdens. A single multiplier on all hours can misstate cost.
What’s a good productivity factor?
Start from recent actuals on similar jobs. For straightforward work you might use 1.00–1.05; for tight sites or heavy coordination, 1.10–1.25 isn’t unusual.
How do I convert cost to a billing rate with a target margin?
Divide the loaded rate by \(1 – g\). For a 30% margin, billing rate \(= R_L / 0.70\).
Where do per-diem and travel time go?
Treat them as \(\$ / h\) adders in overhead or as separate line items. Be consistent so comparisons remain fair across bids.
Can I reuse rates across regions?
Only if wage, fringe, and overhead assumptions match. Maintain region-specific rate sheets and effective dates to avoid hidden variance.
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