Employee cost
Use the annual total when budgeting for a hire. Use cost per worked hour to compare wages with the full cost of employing someone.
FREE BUSINESS TOOL · USD
Free Labor Cost Calculator
Estimate the true cost of an employee, a crew and a job—including employer costs and paid time away from jobs.
Updated September 11, 2026 · No signup requiredCalculate your labor cost
Start with the sample numbers, then enter your own costs. All annual inputs are per employee.
How to calculate labor cost
Your hourly wage is only one part of labor cost. Employer taxes, insurance, benefits and paid time away from jobs affect what each productive hour costs your business.
- Calculate annual wages: hourly wage × paid hours per week × paid weeks, plus overtime pay.
- Add employer costs: wages × your employer cost percentage, plus annual benefits and other employee costs.
- Find productive hours: (regular paid hours − paid leave + overtime hours) × (1 − non-job time percentage).
- Estimate the job: annual labor cost ÷ productive hours × crew size × job duration.
Paid leave is already included in regular wages. The calculator subtracts those hours from available working time; it does not add the same wages again. Non-job time is applied to the hours remaining after leave.
Labor cost example for a three-person service crew
At $25 per hour for 40 hours a week and 52 weeks, one employee earns $52,000 in regular wages. Adding 15% in employer costs and $4,800 in annual benefits gives $64,600 in annual labor cost.
With 120 paid leave hours and 20% non-job time, that employee has 1,568 productive job hours. Labor costs about $41.20 per productive employee-hour, or $123.60 per hour for three employees. An eight-hour job needs a labor budget of about $988.78.
Use the right labor cost for your estimate
Crew & job cost
Use productive crew-hour cost when estimating landscaping, lawn care, tree service or snow removal jobs. Enter elapsed job time—not hours multiplied by crew size.
Customer pricing
Add materials, equipment, overhead and profit separately. The optional hourly-rate section adds overhead and a profit dollar amount to your crew labor cost.
Labor cost calculator questions
What is included in fully loaded labor cost?
Here it means wages plus the employer taxes, insurance, benefits and other employee costs you enter. Cost per productive hour also accounts for paid leave and non-job time. General business overhead and profit remain separate.
How do I calculate labor cost percentage?
Divide job labor cost by job revenue and multiply by 100. The calculator compares the estimated labor budget with the revenue you enter. A result over 100% means estimated labor alone exceeds revenue.
What if my crew members earn different wages?
Calculate each pay group separately, then add the job costs together. This calculator assumes everyone in the entered crew has the same wage, benefits and schedule.
Can I use this for a salaried employee?
This version is designed for hourly employees. For a rough regular-pay equivalent, divide annual salary by annual regular paid hours and enter that hourly amount. Add only actual additional overtime pay when applicable; the tool does not determine overtime eligibility.
Is there a standard labor burden percentage?
Your percentage depends on your actual employer taxes, coverage and employee costs. The sample 15% is illustrative. Use your payroll and insurance records, and avoid counting the same benefits in both the percentage and annual dollar field.
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