Contractor economics
Labor Burden & Billable Rate Calculator
See what one worker really costs after employer-side costs and paid nonproductive time, then optionally turn that true productive-hour cost into a break-even or target-margin rate.
Worker cost inputs
Use your payroll figures. ProjectFigures never inserts a statutory rate for you.
What labor burden means
Wage or salary is only the first layer.
Base compensation is the worker's hourly wage or annual salary. Additional cash compensation such as a known annual bonus is still compensation. Employer labor burden is the employer-side cost beyond that cash compensation: payroll contributions, workers compensation or employer insurance, retirement/pension/super contributions, benefits and other employee-specific employer costs.
Business overhead is different. Rent, office/admin, general software, marketing, accounting and general fleet cost are not employee labor burden. ProjectFigures keeps those layers separate so the same cost is not quietly counted twice.
Paid time vs productive time
A paid hour is not automatically a recoverable hour.
Paid hours include ordinary paid leave and other paid nonproductive time. Productive/recoverable hours are the subset of paid hours that you realistically expect to recover through customer or project work. That denominator is why true productive-hour cost can be much higher than the base wage.
Ordinary PTO, holidays and sick time should not be entered again as a separate wage burden. Their normal wage or salary cost is already in paid compensation. They reduce productive hours instead. An incremental leave loading, training course fee or licence cost can still be entered separately when it is genuinely additional.
Methodology
The calculation stays annual until the final hourly rates.
- Hourly base compensation: hourly wage × annual paid hours
- Annual cash compensation: base compensation + additional annual cash compensation
- Employer burden: percentage-based employer costs + fixed annual employee-specific costs
- Annual loaded labor cost: annual cash compensation + employer labor burden
- True productive-hour cost: annual loaded labor cost ÷ annual productive/recoverable hours
- Break-even billable rate: true productive-hour cost + known/allocated overhead per productive hour
- Target-margin rate: break-even rate ÷ (1 − target margin)
- Equivalent markup: margin ÷ (1 − margin)
No intermediate display rounding is used in the engine. Unsafe or non-finite arithmetic fails closed instead of formatting NaN or Infinity.
Margin vs markup
Margin and markup are not interchangeable.
Margin measures profit as a percentage of the selling rate. Markup measures profit as a percentage of break-even cost. If break-even is 100 and target margin is 20%, the required selling rate is 125. Profit is 25, which is 20% of 125 and a 25% markup on 100.
Worked reference examples
Two contract-checked planning cases.
Hourly employee: 30/hour × 2,080 paid hours = 62,400 base compensation. With employer costs of 10% + 5% + 3%, another 6,000 of fixed annual employee cost and 1,600 productive hours, annual loaded labor cost is 79,632 and true productive-hour cost is 49.77.
Salaried employee: 72,000 salary + 3,000 additional annual cash compensation, 15% combined percentage employer costs, 7,200 fixed annual employer cost and 1,700 productive hours produces 93,450 annual loaded labor cost and approximately 54.97 true cost per productive hour.
These are arithmetic examples only. They are not statutory-rate or market-rate recommendations.
Regional terminology
One calculator, your actual employer-side figures.
US users may think in employer payroll taxes, workers' comp and benefits. UK users may use Employer National Insurance, workplace pension and charge-out rate. Canada may use employer CPP/EI and WCB/WSIB or provincial workers compensation. Australia may use superannuation, workers compensation, payroll tax and employee on-costs. ProjectFigures uses these terms as guidance only and never inserts a current statutory percentage.
USD, GBP, CAD and AUD are labels only. No exchange-rate service is used.
FAQ
Labor burden calculator questions
Is business overhead part of labor burden?
No. Labor burden is employee-specific employer cost. Business overhead is a separate pricing layer and is optional here only when you already know the hourly amount or have already allocated an amount to this employee/role.
Should paid vacation or holidays be added as a benefit cost?
Do not add ordinary paid-leave wages twice. Their wage/salary cost is already in paid compensation. Paid leave normally lowers productive/recoverable hours instead. Only genuinely incremental amounts belong in additional compensation or employer cost.
Does ProjectFigures know current payroll-tax or pension rates?
No. Statutory rates can depend on jurisdiction, thresholds, employee categories and tax years. Enter the employer-side percentage or actual annual amount that applies to your records.
Can I use salary instead of hourly wage?
Yes. Salary is used directly as annual base compensation. Paid hours are still required so ProjectFigures can show cost per paid hour, productive utilization and true productive-hour cost.
How is target margin converted to an hourly rate?
The calculator divides the break-even rate by one minus the target margin. It does not apply the margin percentage as a markup. The equivalent markup is shown separately.
Is this payroll, tax, accounting or legal advice?
No. This is planning arithmetic using figures you provide. Confirm payroll, tax, insurance, pension and employment obligations with the appropriate records or qualified professional.
Connected workflow
Carry true labor cost into a complete job price.
Contractor Job Pricing Calculator combines this true productive-hour labor cost with materials, other direct costs, contingency and overhead.
Concrete Calculator handles concrete quantities and material pricing before the complete job is priced.
Employee-cost and pricing arithmetic using your figures — not payroll, tax, legal or accounting advice.