Free Calculator

Tech labor rate calculator: what to bill for an employee's hour

Enter your true tech costs and desired profit to see the minimum billable rate per hour to break even and the recommended rate at your target margin. No signup, no data stored, runs entirely in your browser.

Your numbers, results update as you type
Tech Wages
$

The tech's base pay for the year. The starting point before anything else.

%

Employer FICA (7.65%), FUTA/SUTA, and workers comp added on top of wages. 22% is a solid default.

$

Health, dental, PTO cash-out, and any other per-tech spending per month.

Billable Hours

27.0 billable hours/week on average

Hours you can actually invoice, not hours worked. Typical field tech: 1,200 to 1,500 after drive time.

Vehicle and Equipment (per tech per year)
$
$
$
Vehicle subtotal $9,600
Overhead Allocated Per Tech (annually)
$
$
$
$
Overhead subtotal $6,000
Target
%

The percentage of gross revenue you keep after all costs. 20% is a healthy target for most trades.

Your labor rate
Break-even rate
$52/hr
Minimum to cover all costs, no profit
Recommended rate
Break-even + your target margin
Wages + burden $63,440
Benefits (annual) $4,800
Vehicle + equipment $9,600
Overhead $6,000
Total annual cost $83,840
At $65/hr for 1,400 billable hours, you bring in $91,000 and keep $7,160 after all costs.
Wages+burden 76%
Benefits 6%
Vehicle 11%
Overhead 7%

What a labor rate calculation should include

Most service businesses undercharge because they calculate labor rate from wages alone. A complete rate captures every dollar the tech's work must recover before the business earns a cent of profit.

  • Technician wages. The hourly base pay or annual salary for the tech, the starting point before anything else
  • Payroll burden. Employer taxes (FICA 7.65%), unemployment (FUTA/SUTA), and workers comp as a combined percentage on top of wages
  • Benefits cost. Health insurance, dental, PTO, and any other per-tech benefit spending allocated monthly
  • Overhead allocation. The share of rent, utilities, software, insurance, and admin that each tech must cover through billable hours
  • Billable hours per year, not the hours worked, but the hours that can actually be invoiced (typical range: 1,200 to 1,500 for a field tech with drive time)
  • Vehicle and equipment cost per tech. Fuel, maintenance, lease or depreciation, and insurance allocated to that technician
  • Target net margin. The percentage of gross revenue the owner wants to retain after all costs, which becomes the markup on top of break-even
  • Recommended rate. The minimum rate just to break even, plus the recommended rate at target margin, both displayed clearly

Related tools for owners

Customer lifetime value calculator Revenue per visit, retention rate, and gross margin give you the true value of one customer. Dispatch schedule template A live day board with one column per tech, hour blocks, status flags, and a callbacks list. Field service report template Test readings, parts, labor, and a customer sign-off line, ready to print as a PDF.
Read next How much does field service software cost? Claver for your trade →

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Labor rate calculator FAQ

How do I calculate my labor rate for a service business?
Add the technician's annual wage to payroll burden, benefits, vehicle costs, and overhead allocation, then divide by billable hours per year to get the break-even rate. Add your target margin on top of that to get the rate you should charge customers.
Is this calculator really free?
Yes, the labor rate calculator is free with no signup, no credit card, and no data stored on a server, so the wage and cost numbers stay on the device.
How many billable hours should I use in my calculation?
Most field technicians generate 1,200 to 1,500 billable hours per year after accounting for drive time, callbacks, training, and non-billable admin. Using 1,400 is a reasonable starting point; adjust down if your techs spend significant time driving between stops.