Labor rate & flat-rate price calculator

How it works

Your hourly rate has to pay for two things: the technician's time with all the costs that come with it, and every other cost of running the shop. Spread those over the hours you can actually bill, then add your profit.

The number most owners get wrong is billable hours. A tech paid for 2,080 hours a year is not billing 2,080 hours: drive time, shop time, callbacks, training and slow days all eat into it. Most shops bill somewhere between 60% and 75% of paid hours.

The formula

Cost per billable hour = (tech wages × (1 + burden) + overhead) ÷ (techs × paid hours × billable efficiency). Hourly rate = cost ÷ (1 − target net profit %).

Worked example

Example: 5 techs at $32/hr with 25% burden, 2,080 paid hours, 65% billable, and $450,000 of overhead. Labor is $416,000, so total cost is $866,000 over 6,760 billable hours: $128.11 per hour to break even. For a 20% net profit, charge $160.13 per hour.