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What an hour of labor really costs your business

Owners price off a wage. The wage is the smallest part. Add taxes, benefits, the truck, the office, and your own paycheck, then divide by the hours you can actually bill, and you get the number every job has to beat. Most shops have never seen it.

See your number
New to this? Start here. The numbers on screen right now are a working example, a typical 4-truck HVAC shop. You only need three things to make it yours. Change those, leave the rest on the defaults, and watch your number move on the right.
  1. 1 Your tech's hourly wage
  2. 2 The hours you pay them a year
  3. 3 How much of that time gets billed (the slider)

The collapsed sections below (taxes, the truck) are already filled with typical numbers. Most owners leave them alone the first time through.

Your shop

Change what you know, leave the rest. Nothing you type leaves your browser.

Not your trade? Load an example, then make it yours:
$
75%
Of 2,080 paid hours, 1,560 get billed to a customer. The rest is drive time, shop time, PTO, and slow days. This one number moves your cost more than anything else here.
▸ Taxes & benefits most leave as is
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%
%
$
%
%
$

Defaults are typical, not gospel. Confirm FUTA/SUI rate and wage base with your accountant and your state.

▸ What the truck carries most leave as is
Vehicle / truckpayment + fuel + maintenance, monthly
$
$
$
Workers' comppercent of wages, by trade
%
Tools & equipmentannual budget per tech
$
Phone / tabletmonthly per tech
$
▸ The business the rung most owners skip

This is where the real money goes, and where flat rates quietly die. It carries on the same billable hours as the truck. The figures below are typical for a small 3 to 5 truck shop. Put your real ones in.

$
$
▸ Your target & today's rate
%
$
You're viewing the HVAC example, not your shop yet. Change the wage, paid hours, team, and the slider on the left to see your real number.
Read three numbers, in order: what a tech truly costs you per billable hour, the floor you cannot bill below, and the one rate to charge. Fill in what you know on the left and leave the rest. The defaults are typical.
1. Your true cost per billable hour the reveal
$0 / hr
Field cost $0 + Office & owner $0
This is what one billable hour costs you with everything in: the truck, the office, and your own paycheck. You bill 0 of the 0 hours you pay each tech.
2 & 3. So here is your number
$0 / billable hour
Your break-even floor is $0. Bill below it and the job loses money. The rate above clears your 10% net profit target. That is the number to remember.
This is the rate to charge to clear your profit target. The wage was never the number.

If that rate feels high for your market, your two fastest fixes are billable hours and overhead, not price. Drag the utilization slider and watch the number move.

Enter what you bill now to see where you really stand.

Know an owner still pricing off a wage? Send them this. Two minutes, runs in their browser, nothing to download.

The cost ladder

Tech wagewhat it feels like a tech costs
$0
Loaded field costwage + taxes + benefits + truck
$0
True cost+ office, software, marketing, your pay
$0
Rate to hit 10% netwhat you should actually bill
$0

The rate at different net-profit targets

Your pricebook should enforce this on every job. A connected ServiceTitan book applies your true cost and target margin automatically, so no tech ever quotes below the survival rate, even on the busy days nobody is checking. That is the work we do.

Get a Pricebook Health Audit

New to this number? How to calculate your loaded labor rate walks the whole ladder, the utilization lever, and the gross-versus-net trap in plain English.

An estimate to start the conversation, not financial or accounting advice. Nothing you type leaves your browser.

Questions

Loaded labor rate, answered

What is a loaded labor rate?

A loaded labor rate is what one hour of a technician’s time actually costs your business, not just the wage. It adds payroll taxes, benefits, the truck, and a share of office overhead and owner pay, then divides by the hours you can actually bill. It is the floor every job has to beat before you make a dollar.

How do you calculate a loaded labor rate?

Add a tech’s annual wage, payroll taxes (FICA, FUTA, SUI), benefits and truck costs to get the field cost. Add a share of company overhead, the office, software, marketing and owner pay, spread across the team’s billable hours. Divide the total by the hours that tech actually bills in a year, not the hours you pay. That number is your true cost per billable hour.

Why is my true cost so much higher than my tech’s wage?

Because the wage is the smallest piece. A 28 dollar wage often carries 90 dollars or more once taxes, benefits, the truck, the office and your own pay are loaded in and divided by billable hours instead of paid hours. The gap is exactly what a wage-based flat rate forgets, and it is why busy shops still run thin.

What is a good billable utilization rate?

Most trades shops bill 60 to 80 percent of the hours they pay for. The rest is drive time, shop time, training and slow days. Utilization is the single biggest lever on your cost: the same technician at 85 percent utilization costs far less per billable hour than at 65 percent. Raising it is the cheapest way to lower your rate.

Is gross margin the same as profit?

No. Gross margin is what is left after direct job cost. Net profit is what is left after everything, including the office and your salary. A rate can show a healthy 45 percent gross margin and still leave only 10 percent net, or less. Gross margin is not take-home, and confusing the two is how shops underprice.

What should I charge per hour?

Enough to clear your true cost plus your target net profit. If your true cost is 92 dollars an hour and you want 10 percent net, you bill about 102 dollars. If that feels high for your market, look at utilization and overhead before you discount, because cutting price below your true cost means losing money on every job.