Free labor cost calculator for contractors

How to calculate labor costs

Enter the number of workers, hours per worker, and hourly wage. The calculator multiplies workers by hours to find worker-hours, then multiplies that total by the wage. If you enter a labor burden percentage, it adds that percentage of wages to the total.

Worker-hours = number of workers × hours per worker

Wages = worker-hours × hourly wage

Burden cost = wages × labor burden ÷ 100

Total labor cost = wages + burden cost

Two workers working eight hours each contribute 16 worker-hours, even though the shift lasts eight hours. Enter 8 in Hours per worker; entering 16 would count the crew’s hours twice.

All fields start blank. Workers must be a whole number of zero or more. Hours, wages, and burden accept nonnegative decimals. Enter 25 for 25% burden, or leave it blank for wages only. Negative or invalid entries don’t produce a result. Dollar amounts display to two decimal places, and worker-hours display with up to two decimal places.

The results show total labor cost, worker-hours, and cost per worker-hour. When you enter burden, they also show wages and burden cost separately. Cost per worker-hour is the hourly wage multiplied by 1 + burden ÷ 100.

Example: a two-person deck repair crew

For a fictional deck repair, two workers each spend eight hours on the job at an hourly wage of $30. The contractor uses a 25% burden allowance for this example. These are illustrative inputs, not recommended wage or burden rates.

The crew works 2 × 8 = 16 worker-hours. Wages total 16 × $30 = $480. Burden adds $480 × 25% = $120, giving a total labor cost of $600 and a cost per worker-hour of $37.50.

Leaving burden blank returns $480 for the same crew and hours. That covers wages only, rather than the additional employer costs in this example.

What to include in labor burden

An employee’s hourly wage is only the wage portion of the employer’s labor cost. Burden may include employer payroll taxes, workers’ compensation insurance, employee benefits, and other employer-paid labor expenses. Which expenses apply, and their amounts, depend on your business.

To express those expenses as a percentage, divide the employer-paid costs you want to include by the wages for the same period, then multiply by 100. Use your payroll and expense records to choose an allowance. The calculator doesn’t supply tax rates, insurance rates, benefit costs, or a standard burden percentage.

Include each expense once. If a cost is already included in your hourly wage input or another part of your job estimate, don’t add it again through burden.

Common labor estimating mistakes

• Leaving out employer costs. A wages-only calculation excludes burden. Enter your allowance when you want the estimate to cover those additional expenses.
• Underestimating the hours. Account for the work in the quoted scope, including setup and cleanup. Revisit the estimate when access, weather, or scope changes affect crew time.
• Entering a customer charge rate as a wage. Use the wage you pay the worker. A billing rate may already include other expenses and profit, which this calculator doesn’t separate.
• Omitting paid time outside direct production. Where you allocate paid travel, loading, or other paid time to the job, include it in your hours. Avoid counting the same allowance again in burden.
• Treating an estimate as a time record. Planned hours aren’t proof of hours worked. Compare the estimate with recorded time and actual labor costs after the work.

What this calculator doesn’t account for

Each calculation uses one hourly wage, one hours-per-worker value, and one burden percentage for the whole group. It doesn’t automatically apply overtime rates, different employee wages, or different shifts. For workers with different inputs, calculate each group or pay-rate period separately and add the totals in your own estimate.

Materials, subcontractors, equipment, overhead outside your entered burden, and profit aren’t separate inputs here. Use the job pricing calculator to combine labor with other job costs. The markup and margin calculator helps compare two ways of adding profit to cost.

The calculator estimates from the numbers you enter. It doesn’t track employee time, create timesheets, or automatically update job costs. Keep the calculation alongside your estimate and record actual hours separately as work progresses.