Labor Cost Calculator for Field Techs: Real Cost per Billable Hour

A tech paid a base rate per hour costs you more than that rate, and the gap is where small shops lose money. This labor cost calculator adds every layer: payroll taxes, workers’ comp, insurance, paid time off, benefits, the truck, the tools, the phone, the software and your share of the office. Then it divides by the hours the tech really bills, and gives you the minimum rate you can charge and still keep your margin. It runs in your browser, with no account and no email.

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How to Calculate Labor Cost for a Field Tech

The calculation has four steps, and the calculator above does all of them.

1. Start with pay. Base rate times paid hours per week, plus overtime hours at your overtime multiplier. The calculator has a separate field for overtime and double-time so a busy season does not hide inside an average.
2. Add burden. Burden is everything you pay because you employ the person, on top of wages. Each line is its own field, so you can see which one is moving your number.
3. Add the cost of the kit. Vehicle, fuel, tools, phone and software, per tech per month. Add your office overhead, spread across the techs it supports.
4. Divide by the right hours. Total monthly cost divided by paid hours gives cost per paid hour. Divided by billable hours, it gives the number that matters.

In one line: cost per billable hour = (wages + burden + vehicle and tools + software + overhead share) / billable hours. The minimum selling rate is that cost divided by (1 minus your target margin).

What Goes into Labor Burden

Burden is not one percentage you can guess. It is a stack of separate costs, and some of them depend on your state, your trade and your claims history. That is why the calculator asks for each one by line instead of applying a flat rate.

Payroll taxes

Employers pay Social Security and Medicare tax on wages. The IRS lists the current rates as 6.2% for Social Security and 1.45% for Medicare on the employer side, which adds up to 7.65%. We read that on the IRS page for Topic no. 751. The calculator starts the FICA line at 7.65% and you can change it.

Federal unemployment tax (FUTA) and state unemployment tax (SUI) come on top. The IRS page for Topic no. 759 gives FUTA as 6.0% of the first $7,000 of each employee’s wages, with a credit of up to 5.4% for state unemployment tax paid, so the calculator starts FUTA at 0.6% on that first $7,000. SUI rates vary by state and by your own history, so the SUI field starts empty. Look up your rate on your state workforce agency’s website and type it in. We do not pre-fill it, because a wrong default would quietly skew every result.

Workers’ comp

Workers’ compensation is priced by the class code of the work and the payroll in each class, so a roofer and an office-based estimator are not the same line. The calculator gives you a field for your rate and leaves it blank. Your policy or your insurance agent gives you the real figure, and your state’s workers’ compensation agency is the place to check how rates are set where you work. Add general liability in its own field, since it is often priced per tech or per revenue dollar.

Vehicle and tools

For most field trades, the van is the second largest cost after wages. Include the payment or lease, insurance, fuel, maintenance and the tools and consumables you hand each tech. Enter them per tech per month. If two techs share one truck, split it between them rather than counting it twice or not at all.

Paid time off and benefits belong in the stack too. A tech paid for a week of holiday still costs you that week, and the hours do not bill. The calculator pays wages for all 52 weeks, so paid time off shows up where it hurts: as paid hours with nothing billed, inside the billable share below. Enter health and other benefits as a monthly amount.

Paid Hours vs Billable Hours

This is the number that kills margin. You pay for the full day: the drive to the first job, the supplier run, the call-back, the paperwork, the slow Tuesday. You can only invoice the hours spent on billable work.

Utilization is billable hours divided by paid hours. If a tech is paid for 40 hours and bills 28, utilization is 70%, and every billable hour has to carry the cost of the 12 that did not bill. Your cost per billable hour is your cost per paid hour divided by utilization, so a tech who costs the same but bills fewer hours costs you more per invoice line.

That is why the calculator shows both figures. Change the billable share and watch the cost per billable hour move. Often a small gain in utilization, from better scheduling and routing, does more for margin than a price rise. Measure your own utilization from a few weeks of timesheets and invoices before you trust a guess.

From Cost to Hourly Rate (Markup vs Margin)

Once you know cost per billable hour, you set a price. Markup and margin sound alike and give different answers.

• Markup is the amount you add on top of cost, as a percentage of cost. Add 50% to a cost of 100 and the price is 150.
• Margin is the share of the price you keep. A price of 150 on a cost of 100 is a margin of one third, not 50%.

If you want a margin of 40%, adding a 40% markup is a classic mistake: you end up with a margin of about 29%. To keep a given margin, divide cost by (1 minus margin). The calculator does this and also prints the equivalent markup, so you can quote it to your team in whichever language they use. The same maths drives the estimate lines in our estimate template.

What Software Adds per Tech

Field service software is a per-tech cost too, and it is easy to forget. Some plans include a set number of users, others charge per extra user. For a one-person shop, Jobber’s Core plan is $29/mo billed yearly, and Housecall Pro’s Basic plan is $59/mo billed yearly. Enter the software line as its monthly cost divided by the number of techs it covers.

For the full comparison by crew size, use our software cost calculator, or read the Jobber pricing breakdown to see how the per-user tiers change what a 3 or 8 person crew pays. For the full cost of one office employee, the employee cost calculator is the better fit.

How We Built This

Every field you can fill in is a line that exists in a real payroll or insurance bill. Where a figure varies by state or by policy, we left it empty and said where to look it up. Method and sources are on how we test.