The wage on a technician's paycheck is only part of what an hour of their time actually costs you. Labor burden is everything you spend on top of base wages to keep that person working: payroll taxes, insurance, benefits, a truck, tools, a phone, and software. Add it up and you get a fully-loaded cost per hour, which is the number every profitable price starts from.
Use the calculator below to estimate a single technician's annual burden and what one clock hour really costs. Then read on for what belongs in each bucket, how the math works, and the mistakes that quietly erode margin.
Calculate your labor burden
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What labor burden includes
Labor burden is the sum of all the recurring costs required to field one technician, excluding their base wage. The categories below map to the calculator inputs. Actual amounts vary widely by trade, region, and how you structure benefits, so treat these as prompts rather than targets.
| Component | What it captures | Notes |
|---|---|---|
| Payroll taxes | Employer share of Social Security, Medicare, and unemployment taxes | Rates and wage bases differ by jurisdiction |
| Insurance & benefits | Workers' comp, general/auto liability, health insurance, retirement match, paid time off | Often the largest single burden bucket |
| Vehicle, fuel & tools | Truck payment or lease, fuel, maintenance, insurance, and the tools they carry | Spread the annual cost across the technicians who use the asset |
| Phone, software & training | Mobile plan, field-service or dispatch software seat, certifications, ongoing training | Small per line, meaningful in aggregate |
You do not have to force every cost into these exact buckets. The goal is that the four inputs together capture the real annual cost of employing that person beyond their wage.
How the math works
The calculation is straightforward once the numbers are gathered:
- Total labor burden = payroll taxes + insurance & benefits + vehicle, fuel & tools + phone, software & training. It is simply the sum of your non-wage costs for the year.
- Burden as a percentage of wage = total burden ÷ base wage. This lets you compare technicians and sanity-check your figure against rough industry norms, which commonly land somewhere around 25–45% of wage but vary meaningfully by trade and region.
- Fully-loaded cost per clock hour = (base wage + total burden) ÷ 2,080. The 2,080 figure is 40 hours a week across 52 weeks, so it represents every paid clock hour in a year.
There is one important nuance. Dividing by 2,080 gives you the cost of every clock hour, but a technician is not billable during all of those hours. Drive time, restocking, paperwork, training, and idle gaps between calls all consume paid time that no customer pays for directly. To find the rate you actually need to charge, divide the fully-loaded annual cost by billable hours, not total clock hours. Because billable hours are fewer, the true rate is higher, often significantly. Work that out in the billable hourly rate calculator, then use it as the floor when you price service jobs profitably.
Common mistakes
- Pricing off the wage alone. Quoting labor at or near the hourly wage ignores burden entirely and all but guarantees you lose money on labor. The loaded cost, not the wage, is the starting point.
- Dividing by 2,080 and stopping there. The clock-hour cost understates your real rate because it assumes every paid hour is sold. Always convert to a billable rate before you quote.
- Forgetting the truck and the tools. Vehicle payments, fuel, and equipment are easy to treat as overhead and leave out, but they are a genuine cost of putting that technician on a job.
- Setting it once and forgetting it. Wages, insurance premiums, and fuel prices all move. Revisit your burden at least annually, and any time a major cost changes.
For a step-by-step walkthrough with worked examples, see how to calculate labor burden.
FAQ
What is a typical labor burden percentage?
It varies too much for a single right answer. Many field-service businesses see burden land somewhere around 25–45% of base wage, but the figure depends heavily on your trade, region, benefits, and how much vehicle and equipment cost you carry per technician. Calculate your own rather than borrowing a benchmark.
Should I use clock hours or billable hours?
Use clock hours (2,080 a year for a full-time employee) to understand your cost per paid hour. Use billable hours to set the rate you charge, because customers only pay for the hours technicians are actually on billable work. The billable rate is always higher than the clock-hour cost.
Does labor burden include overhead and profit?
No. Labor burden is the cost of employing the technician. Office rent, administrative salaries, marketing, and the profit margin you want are separate layers you add on top when building a price. Burden tells you where the price has to start, not where it should end.
This calculator is for general educational estimation only and is not tax, accounting, or legal advice; payroll taxes, insurance requirements, and allowable costs vary by jurisdiction, so confirm your figures with a qualified professional.