Labor Cost Calculator — True Cost of an Employee
A $28/hour tech isn't $28/hour. By the time payroll taxes, workers comp, and benefits are in, they're $35–38. And if only part of their paid time is actually billable, the real number is higher still.
This calculator shows the fully-burdened cost and what you actually need to bill per hour — the number most contractors discover too late.
Burdened cost
$34.20/hr
True cost (billable)
$48.86/hr
Per 40-hr week
$1368
A $28/hr tech actually costs ~$35–38/hr with taxes, comp, and benefits — and if only 70% of paid hours are billable, you need to bill ~$50/hr just to break even on them.
The formula
Burdened cost = Wage × (1 + taxes/comp %) + benefits per hour. True billable cost = Burdened ÷ billable %. Example: $28 × 1.15 + $2 = $34.20; at 70% billable → $48.86/hr.
Pro tips
- →Include ALL payroll taxes: Social Security, Medicare, unemployment, plus workers comp (2–15% for trades).
- →Be honest about billable time — travel, loading, and shop time aren't billable.
- →If the true cost is above what you charge, you're subsidizing the employee out of your own profit.
Frequently Asked Questions
How much does an employee really cost per hour?+
Typically 1.25–1.4× their wage with taxes, comp, and benefits. A $30/hr tech costs $37.50–$42/hour.
What's a good billable utilization rate?+
60–75% is realistic for field crews. Above 80% is excellent; below 50% means too much non-billable time.
How do I price labor into a job?+
Use the true billable cost, then add your markup. If the true cost is $49/hr, billing $85–95/hr gives a healthy margin.
Now imagine the quoting writing itself.
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