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Est. 2022Tech Turtle

Pricing and Profit · FREE TOOL

Free Labor Rate Calculator

A labor selling rate must recover more than hourly wages. Divide annual labor and allocated overhead costs by realistic billable hours, then apply your chosen margin.

YOUR WORKSPACE

Make it useful. Make it yours.

Start with the clearly labeled example values, then enter your own numbers. Your basic result is free.

Your result

Annual cost: $90,000.00 Cost per billable hour: $60.00 Modeled selling rate: $80.00/hour

This is your cost model, not a recommended market rate, wage or tax calculation. Use actual payroll and insurance records and update assumptions as workload changes.

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How to use this tool

  1. Enter annual wages or owner compensation and annual employer costs.
  2. Allocate overhead without counting the same cost twice. Estimate actual billable hours after time off, admin and unbilled travel.
  3. Choose a margin and review the modeled hourly selling rate.

A worked example

$60,000 wages + $12,000 employer costs + $18,000 overhead = $90,000. At 1,500 billable hours, cost is $60/hour. A 25% margin gives $80/hour.

What the result includes

This is your cost model, not a recommended market rate, wage or tax calculation. Use actual payroll and insurance records and update assumptions as workload changes.

Common questions

Why not use 2,080 billable hours?

A full-time year includes time that may not be billable: holidays, estimates, admin, training and downtime. Use hours you can realistically sell.

Does the tool calculate payroll taxes?

No. Enter your verified annual employer costs as a dollar amount.

Prepared by the Tech Turtle team. Formulas and assumptions are explained above so you can check the result against your own job records.

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