Labor Cost Calculator

An hour of someone's time costs more than their hourly wage, and the gap is bigger than most people guess. Employer payroll taxes, insurance, benefits and paid leave all sit on top before you have accounted for a single unbillable hour.

The usual loading is 1.25 to 1.4 times base pay. So a 25 USD an hour employee realistically costs 31 to 35 USD an hour to employ. If you quote work at 30 USD an hour you are losing money on every hour before overhead.

This is the part people leave out. If someone is paid for 2,080 hours a year but takes 15 days of leave and 10 holidays, they are actually at work for about 1,880 hours. The salary did not change, so every working hour now carries more of it.

Divide the fully loaded annual cost by hours actually worked, not hours paid. Using 2,080 understates your cost per productive hour by roughly 10%.

Cost is the floor, not the price. Between them sit the hours you cannot bill, which is where most quotes go wrong: a team billing 60% of its time needs a rate well above cost just to break even.

Feed this figure into the billable rate calculator to add utilization and margin. To see what a job actually consumed once it is done, project time tracking compares tracked cost against the budget.