Work out what an hour of labor really costs your business, including payroll on-costs, overhead and the hours nobody can bill, then the charge-out rate that covers it with a margin. Put the result straight onto a quote.
A $25 an hour wage with 12% on-costs is $28.00. Add $10 overhead per hour = $38.00. At 75% billable, the true cost is $50.67 per billable hour. With a 20% markup, the charge-out rate is $60.80 an hour, so an 8-hour job is priced at $486.40 in labor.
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True cost per billable hour = (wage × (1 + on-costs) + overhead per hour) ÷ billable share. Your charge-out rate is that cost plus your profit markup.
Add employer costs on top of the hourly wage. In the US that includes employer Social Security and Medicare (7.65% under FICA), federal and state unemployment taxes, workers' compensation and any benefits. In Australia it includes the 12% superannuation guarantee, workers' compensation premiums, leave and leave loading, and payroll tax once a business passes its state's threshold.
You pay for every hour worked, but only some can be charged to a client. Travel between jobs, quoting, ordering materials and admin all eat into billable time. Dividing by the billable share spreads those costs over the hours that earn.
Vehicle, tools, insurance, software and phone costs belong in the rate too. Then add a markup so the business makes a profit, not just covers its costs.
Press Turn this into a quote to put the labor line into the free quote maker. Pricing materials as well? Use the markup calculator.
Multiply the hourly wage by one plus your payroll on-cost percentage, add overhead per hour, then divide by the share of paid hours that are billable. That gives the true cost of each hour you can charge for.
The hourly price you charge clients for labor. It is your true cost per billable hour plus a profit markup, so every billed hour covers wages, on-costs, overhead and margin.
Employer costs on top of wages. In the US that includes FICA (7.65%), unemployment taxes, workers' comp and benefits. In Australia it includes the 12% super guarantee, workers' comp, leave loading and, above the threshold, payroll tax.
Yes. Enter the hourly pay you want to take home as the wage, set on-costs to cover your own super or insurance, and use your real billable share. The result is the minimum rate to charge.
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General information only; reviewed August 2026.