Burdened Labor Rate and Billable Hourly Rate Calculator
Know What an Hour of Labor Really Costs, and What to Bill for It
A $30/hr wage can cost you close to $50 per billable hour once taxes, comp, benefits, and unbilled time are added. Enter your numbers to see your true burdened labor cost and the hourly rate that covers overhead and profit.
Burdened Labor Rate and Billable Rate Calculator
Turn a base wage into the true cost of each billable hour, then into the hourly rate you need to bill.
What Is a Burdened Labor Rate?
A burdened labor rate is what an hour of field labor really costs your business: the base wage plus employer payroll taxes, workers' compensation, benefits, and the paid hours nobody can bill (holidays, PTO, shop time, travel, training). Your billable hourly rate is that burdened cost plus a share of overhead plus profit.
The formulas this calculator uses
- Annual labor cost = Wage × Paid hours × (1 + Payroll tax % + Workers' comp %) + Benefits
- Burdened cost per billable hour = Annual labor cost ÷ Billable hours
- Billable rate = (Burdened cost per hour + Overhead per hour) × (1 + Profit markup)
Worked example
A carpenter earns $30/hr for 2,080 paid hours ($62,400). Payroll taxes at 9% and workers' comp at 8% add $10,608. Benefits add $6,000, for $79,008 a year. If 1,650 of those hours are billable, the burdened cost is $47.88 per billable hour, about 60% above the base wage. Add $15/hr of overhead and a 15% profit markup and the billable rate is about $72.32/hr. These are placeholder inputs; use your own.
What Goes Into Labor Burden
| Cost | What to use |
|---|---|
| Social Security and Medicare (FICA) | Employers pay 6.2% Social Security (up to the annual wage base) and 1.45% Medicare on wages (IRS Topic 751) |
| Federal unemployment (FUTA) | 6.0% on the first $7,000 of wages per employee, usually reduced to 0.6% by the state credit (IRS Topic 759) |
| State unemployment and other state taxes | Your assigned state rate |
| Workers' compensation | Your carrier's rate for each class code, as a % of payroll |
| Benefits | Health insurance, retirement match, and other per-employee costs, per year |
| Non-billable paid time | Captured by entering paid hours vs. billable hours |
Why Billable Hours Matter So Much
The biggest swing in your labor rate is usually not the wage. It is how many paid hours you can bill. A worker paid for 2,080 hours who bills 1,650 has 79% utilization; every unbilled hour still has to be paid for by the hours you do bill. Track time by job with the construction timesheet template to get a real utilization number.
Labor Markup vs. Margin
A 50% markup on labor cost is a 33.3% gross margin, not 50%. If you are pricing from a margin target, convert it first with the markup and margin calculator.
Free Burdened Labor Rate Spreadsheet
Need rates for the whole crew? The free burdened labor rate calculator spreadsheet (Excel and Google Sheets) works out burdened cost, burden %, billable rate, and utilization for each employee or role.
Related Tools
- Markup and margin calculator
- Construction budget template
- Contractor revenue planner
- Construction timesheet template
Eano Pro uses your labor rates in every estimate and tracks labor cost against budget as the job runs. Start a free trial.