True Labor Cost Calculator
Your technician's wage is only part of the cost. Calculate the real cost per billable hour including taxes, benefits, vehicle, and non-billable time.
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Employee Details
FICA: 7.65% employer
Varies by trade (1-8%)
% of work hours spent on billable customer jobs (typical: 60-70%)
True Labor Cost Breakdown
Additional cost above base wage
Key insight: Your employee's base rate is $25/hr, but the true cost per billable hour is $59.54/hr — that's 2.4x the base wage. You must charge well above this rate to cover costs and make a profit.
Frequently Asked Questions
What is a labor burden rate?
The labor burden rate is the total cost of employing a worker above their base wage, expressed as a percentage. It includes payroll taxes, workers comp, health insurance, PTO, training, and other benefits. For service businesses, the burden rate typically runs 30-50% above the base wage.
What is the difference between billable and non-billable hours?
Billable hours are time spent directly on customer jobs that you can charge for. Non-billable hours include travel time, administrative work, training, meetings, and downtime between jobs. Most service technicians are only billable 60-70% of their total working hours.
Why does my true labor cost matter for pricing?
If you price jobs based only on the technician's hourly wage, you're losing money. The true cost per billable hour is typically 2-3x the base wage when you account for taxes, benefits, vehicle costs, tools, non-billable time, and overhead. You must price above your true cost to make a profit.
Track Labor Costs Automatically
Business Genie tracks time, calculates job costs, and shows you profitability per technician and per job.
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