What is a typical labor burden rate?

Most residential contractors use 20–30% depending on state taxes, workers' comp and benefits.

Should labor include my own time?

Yes — bill your working time as labor and keep your profit and overhead separate.

How do I make hours more accurate?

Track actual hours per task on completed jobs and reuse those production rates.

Estimating

How do I calculate labor cost for a job?

Quick answer

Multiply the estimated man-hours by the hourly wage, then add a labor burden of 20–30% for payroll taxes, insurance and benefits. That total is your true labor cost, which you then mark up for overhead and profit.

Definition

Labor cost is the full cost of the people on a job: wages plus the labor burden. It's a cost input, not the price you charge the customer.

Step by step

1Estimate man-hours by task: workers × hours each.
2Multiply by the hourly wage for base labor.
3Add 20–30% labor burden for taxes, comp and benefits.
4Mark up the total for overhead and profit to reach the price.

Key takeaways

True labor cost = wages × (1 + burden).
Underestimating hours is the most common estimate mistake.
Build a production-rate library from real jobs.

Frequently asked questions

Handy calculators

Labor Cost Calculator

Total labor cost from crew size, hours and hourly rate.

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Markup Calculator

Turn job cost into a selling price at your target markup.

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