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Free Labor Cost Calculator

Labor Cost Calculator

Calculate the true cost of labor with our free labor cost calculator. Add wages, payroll taxes, workers' compensation, benefits, and other labor costs to estimate your cost per employee and cost per billable hour. Built by Arrivy for trade and service businesses, Arrivy helps teams connect labor costs with pricing, scheduling, job execution, and overall operational performance.

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Calculate Your Labor Cost with Arrivy

Enter the wage, payroll taxes, workers' compensation, benefits, and billable hours. Your labor cost updates in real time as you go. Review the results and adjust the inputs as needed.

Base pay

The wage you pay — before any of the costs stacked on top.

Hourly wage

Paid hours / year (2080 = full-time)

Labor burden

Everything you pay on top of the wage.

Payroll taxes (FICA, FUTA, SUTA)

Workers' comp (% of payroll)

Benefits / year (health, retirement)

Other / year (vehicle, tools, phone)

Billable time

Paid hours that are actually billable — the rest (drive time, admin, callbacks) still costs you.

Billable utilization70%

True cost per billable hour

Loaded / paid hr

Burden

Annual cost

What the hour is made of

Base wage

Loaded cost / hr

Billable hrs / yr

Cost / billable hr

Manage labor in Arrivy

Estimates use your inputs — adjust to match your real costs. Benchmarks are starting points, not advice.

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The Number Behind Every Labor Cost Decision

Your hourly wage is only one part of your labor cost. Payroll taxes, workers’ compensation, benefits, and other employment costs all contribute to the total cost of each employee. Understanding your true labor cost helps you estimate work more accurately, set pricing with confidence, and make better operational decisions.

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Knowing your labor cost is only one part of the equation. Arrivy helps trade and service businesses connect labor planning with scheduling, job execution, and overall operational performance.

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How to Calculate Your Labor Cost

Use the labor cost calculator above or follow these six steps to calculate your own. Understanding your true labor cost helps you estimate jobs more accurately, price your services, and understand the full cost of employing your team.

1. Enter the base wage. Start with the employee's hourly wage or equivalent labor rate.
2. Add payroll taxes. Include the payroll taxes your business pays in addition to wages.
3. Add workers' compensation. Enter your workers' compensation cost based on the applicable rate for the employee or trade.
4. Include benefits and other labor costs. Add benefits, allowances, or other employment-related costs that apply to the employee.
5. Enter billable hours. Estimate the number of hours the employee spends on billable work to calculate the cost per billable hour.
6. Review your results. Use the calculated labor cost as a reference when estimating work, setting prices, and evaluating job profitability.

Common Elements of a Labor Cost Calculation

A labor cost calculation typically includes:

Base wage

The employee's hourly wage or equivalent labor rate before additional costs.

Payroll taxes

Employer-paid payroll taxes associated with the employee's wages.

Workers' compensation

Workers' compensation costs based on the applicable rate for the employee or trade.

Benefits

Employment benefits such as health insurance, retirement contributions, paid leave, or other employee benefits where applicable.

Other labor costs

Additional costs related to employing the worker, such as uniforms, tools, vehicles, training, or other job-related expenses.

Billable hours

The number of hours available for billable work, used to calculate the labor cost per billable hour.

Frequently Asked Questions

Your business pays employees for all working hours, but not every hour is billable to a customer. Calculating labor cost based on billable hours provides a clearer picture of the cost that needs to be recovered through your services.

A labor cost calculation typically includes the employee's wage, employer-paid payroll taxes, workers' compensation, benefits, and other employment-related costs. Including these costs provides a more complete estimate of the total labor cost.

A labor cost calculator estimates what it costs your business to employ a worker. A service pricing calculator uses those costs, along with other business expenses and desired profit margins, to help determine what to charge for a job.

Yes. The calculator can be used across different trades and service businesses. Simply enter the labor costs and other values that apply to your business and employees.

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