Free Labor Cost Calculator

Calculate your true hourly billable rate including wages, direct costs, indirect costs, and profit.

100% FreeInstant ResultsNo Sign-up

Enter Labor Costs

Base hourly wage for workers

$/hr

Payroll taxes, benefits, supplies

$/hr

Supervision, admin, overhead per hour

$/hr

Your desired hourly profit

$/hr

Your Hourly Rate

Bill Rate Per Hour

$0.00

/hour

Base + Direct + Indirect$0.00
Profit per Hour$0.00
Profit Margin0.0%

10-hour job: $0.00

Use your calculated rates in professional estimates

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What is a Labor Cost Calculator?

A labor cost calculator is an online tool to estimate the cost of labor for a specific contracting job. Widely used by contractors and small business owners, it takes into account various factors to give you an accurate picture of your true labor expenses.

What Goes Into Your Rate

Key Factors in Labor Cost Calculation

💵

Hourly Wages

Base pay for employees and contractors working on the job.

🏥

Benefits

Health insurance, retirement contributions, and other employee benefits.

📋

Payroll Taxes

Social security, Medicare, unemployment, and other required taxes.

🛡️

Workers' Compensation

Insurance costs to protect employees on the job.

🔧

Job-Related Expenses

Tools, equipment, supplies, and materials needed for work.

🏢

Overhead Costs

Office space, utilities, administration, and general business expenses.

Use the Labor Cost Calculator to Determine

This calculator helps you understand your true costs so you can price jobs profitably:

Calculate

Hourly Contractor Salary
Combined wages for all workers on a job
Direct & Indirect Costs
Full breakdown of labor-related expenses
Profit & Markup
Use our markup calculator to set the right prices

Benefit

Accurate Billing Rates
Know your true cost per hour
Better Estimates
Create professional estimates with confidence
Profitable Pricing
Use our pricing calculator for optimal rates
How to Calculate Labor Cost
Hourly Rate = Salary + Direct Costs + Indirect Costs + Profit
Hourly SalaryCombined hourly wages for all contractors on the job
Direct Hourly CostsPayroll taxes, benefits, supplies not included in base wages
Indirect Hourly CostsSupervision, admin support, and overhead allocated per hour
Profit AmountNet amount per hour for business growth and profit margin
Example
$20 + $10 + $15 + $4.50
$49.50/hour billable rate
Work Smarter, Not Harder

Benefits of the Labor Cost Calculator

⏱️

Save Time

Skip manual calculations. Get accurate labor costs in seconds so you can focus on your contracting work.

📊

Accurate Hourly Rates

Factor in every cost—wages, taxes, benefits, and overhead—to find your true billable rate.

💰

Profit Visibility

See your profit margin clearly. Pair with our markup calculator for complete pricing control.

✓

No More Guessing

Eliminate estimation errors. Create accurate invoices that cover all your costs.

Step-by-Step Breakdown

Example: Calculating Hourly Labor Cost

1
Combined Wages
Two employees at $10/hour = $20/hour combined
2
Payroll and Benefits
$5/hour each = $10/hour total direct costs
3
Supervision and Support
$10/hour supervision + $5/hour indirect = $15/hour
4
Profit Margin
Profit at 10% margin = $4.50/hour

Total Hourly Labor Cost = $49.50/hour

This is your true billable hourly rate that covers all costs and ensures profitability. Use this rate when creating estimates and invoices.

Complete Project Calculation

Example: Calculating Project Labor Cost

1
Combined Hourly Salary
$20/hour for two workers
2
Project Estimate
2 employees x 5 hours = 10 labor hours
3
Project Salary
$200 (10 hours x $20)
4
Direct Costs
$50 ($5/hour x 10 hours)
5
Indirect Costs
$20 (1 hour of supervision x $20)
6
Profit at 10%
$27 added for business profit

Total Project Labor Cost = $297

Use this total when creating estimates for your clients to ensure you're covering all labor expenses and maintaining profitability.

Boost Productivity by 80%

Use the Labor Cost Calculator by InvoiceOwl to calculate costs automatically and spend more time on your contracting job.

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Frequently Asked Questions

Labor cost is a wide category including fixed and variable expenses: hiring, training, compensating costs, overtime, training days, vacation and sick days, meals, supplies, payroll, health care, benefits, and bonuses.
The formula is: Hourly Salary + Direct Labor Costs + Indirect Labor Costs + Profit Amount. Each component builds on the base hourly wage to determine your true labor cost.
Add up: hourly salary, direct costs (payroll, benefits), indirect costs (supervision, support), and desired profit amount per hour.
Multiply your calculated hourly labor cost by the number of labor hours needed. Factor in all workers and the time required to complete the project.
Labor costs typically consist of about 30% of entire company expenses. If your labor cost percentage is too high or low, you may need to adjust wages, direct costs, and indirect costs.
Once you know your true labor cost, use our markup calculator to add your desired profit margin. Then create professional estimates and invoices with InvoiceOwl.
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