/ Labor Cost Calculator

Employee True Cost Calculator

Your $25/hr tech does not cost you $25/hr. Between payroll taxes, workers comp, benefits, PTO, training, callbacks, and the truck you hand them, the real number is almost always 30–70% higher. Type your numbers in — every line updates live. No spreadsheets, no guessing.

/ Section 1

Base compensation

/ Section 2

State & payroll taxes

FICA

7.65%

Fixed federal

FUTA

0.60%

First $7,000

SUTA — Arizona

2.00%

first $8,000

/ Section 3

Benefits & insurance

/ Section 4

Time off & non-productive

/ Section 5

Employer-provided equipment

/ The reveal

Your $25.00/hr employee actually costs you:

$39.98/ hour
1.60×above base wageThat's an extra $14.98 per hour beyond wage.

What you think you pay

$50,000

Annual gross wage

What you actually pay

$69,577

+ $19,577 hidden

Where the money goes$69,577
Base wage$50,000(72%)
Payroll tax$4,027(6%)
Workers comp$1,750(3%)
Benefits$4,800(7%)
Time off$6,700(10%)
Equipment$2,300(3%)

/ Hours analysis

Total paid hours

2,000

hrs / year

Non-productive

168

hrs / year

Productive hours

1,832

hrs / year

After callbacks

1,740

hrs / year

You're paying for 2,000 hours but only billing 1,740.

/ Line-by-line breakdown

Every dollar, accounted for

Base wage

$50,000
Annual gross wage$50,000

Payroll taxes

$4,027
FICA (7.65%)$3,825
FUTA (0.6% / $7k)$42
SUTA (Arizona)$160

Workers comp

$1,750
Annual premium$1,750

Benefits

$4,800
Health insurance$4,800
Retirement match$0
Other benefits$0

Time off & non-productive

$6,700
PTO$2,000
Holidays$1,200
Training$1,000
Callbacks$2,500

Equipment

$2,300
Vehicle / truck$0
Tools$1,200
Phone / tablet$600
Uniforms / PPE$500

Download your full cost report

Every line item, totals, and the final true cost per hour.

/ The next move

Now multiply this by every tech on your crew.

If your pricing doesn't account for the full burdened cost of labor, you're losing money on every job. Our pricing workshop walks you through exactly how to set your rates.

Try the Pricing WorkshopGet a free website audit

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/ Labor Cost Guide

How much does it really cost to hire a service technician?

Every service contractor we talk to eventually asks the same question: "If I pay my tech $25 an hour, how much do they actually cost me?" The honest answer is almost never $25. Once you factor in payroll taxes, workers compensation, benefits, paid time off, training, and the truck, tools, phone, and uniforms you hand them on day one, the real cost usually lands between $35 and $55 per hour. That gap — between what you think you're paying and what you're really paying — is where most small contracting businesses quietly lose their margin.

Payroll taxes and workers comp — the easy part

The tax portion of a burdened labor rate is the most predictable. You owe the employer half of FICA (7.65%), FUTA on the first $7,000 of wages at 0.6%, and SUTA at your state's rate on your state's wage base. Those three together usually come to 8–10% of gross wage. Workers comp is the wildcard — a plumbing or HVAC service tech typically runs $3–$6 per $100 of payroll, electricians run $2–$4, and roofers run $8–$15 or more. The calculator above uses the new-employer SUTA rate and wage base for each state, but your actual experience-modifier rate may differ — check your carrier.

Benefits and time off — where the math gets painful

Benefits are where burdened cost starts to surprise owners. A $400/month health insurance contribution is $4,800 a year. A 3% 401(k) match on a $50,000 wage is another $1,500. Dental, vision, and life can add $1,000–$2,000 more. But the bigger shock is paid non-productive time. Ten days of PTO plus six paid holidays at $25/hr is $3,200 you pay a tech for zero revenue. Forty hours of training is another $1,000. And if 5% of your jobs generate an unbilled callback, that's another $2,500 of your tech's time you can never recover.

The calculator above treats those non-productive hours as a double hit: they're real dollars out the door, and they shrink the denominator you divide total cost by. So you're not just spending more — you're getting fewer billable hours to absorb that spend. That's why the burdened rate climbs so quickly.

Equipment, vehicles, and uniforms — the forgotten bucket

If you hand a tech a company truck, you are paying for that tech. The same goes for tools, phones, tablets, and uniforms. None of these are "fleet overhead" in the pricing workshop sense — they are costs you would not incur if you didn't have this employee. A truck at $1,500 a month is $18,000 a year, more than many contractors realize. A $100/month tool allowance plus a $50/month phone plus $500 a year in uniforms and PPE adds another $2,300. Add it all up and a modestly-equipped tech can easily carry $20,000+ in annual employer-provided equipment costs on top of everything else.

How burdened labor rate affects what you should charge

Once you know your true cost per hour, you can stop guessing what to charge. Your billable hourly rate needs to cover burdened labor, overhead per billable hour, and your target profit margin. If your tech truly costs $42/hr, your overhead adds another $25/hr, and you want a 20% net margin, you need to bill roughly $84/hr on labor — not $65, not $70. The contractors who win in this industry aren't the ones with the cheapest rates; they're the ones who understand the math and price accordingly. This calculator gets you the first number. Our pricing workshop walks you through the rest.

/ Frequently Asked

Labor cost questions — answered

Most HVAC contractors pay a tech $22–$35/hr in base wage, but the fully-loaded cost lands between $32 and $55/hr once you add FICA, FUTA, SUTA, workers comp, PTO, holidays, training, health insurance, and truck/tool/phone allowances. The burden multiplier — true cost divided by hourly wage — usually falls between 1.35× and 1.7× depending on state, benefits package, and how much unpaid non-productive time you absorb. The calculator above breaks down every line so you can see exactly where the gap comes from.
Workers comp is quoted in dollars per $100 of payroll. As of 2025 the typical new-employer rates by trade look like this: HVAC service and plumbing run $3–$6, electricians run $2–$4, general carpentry runs $5–$9, and roofing runs $8–$15 (sometimes higher in certain states). Your actual rate depends on your experience modifier, your classification codes, and the state. Always confirm with your carrier — this tool uses the number you enter.
Start with annual gross wage (hourly × hours/day × working days). Add employer-paid payroll taxes (FICA 7.65% + FUTA on first $7k + SUTA on your state's wage base), workers comp (rate × payroll ÷ 100), and all benefits (health insurance, retirement match, dental/vision/life). Add the cost of paid-but-non-productive time: PTO, holidays, training hours, and the callback/warranty rate. Finally add employer-provided equipment — vehicle, tools, phone, uniforms. Divide that full cost by the tech's *effective productive hours* (total paid hours minus non-productive time, further reduced by callback rate). That number is your true cost per hour.
Three reasons, usually in this order. First: taxes and workers comp stack up to 10–20% of gross wage before you do anything else. Second: you pay techs for hours they aren't producing — PTO, holidays, training, and callbacks — which shrinks the denominator you divide your costs into. Third: most owners forget to count the employer portion of health insurance, phone, truck, and tool allowances, all of which are real cash out the door. The $25/hr tech who costs you $42/hr isn't unusual — it's the norm.
Yes, and most contractors don't. If 5% of your jobs generate a return trip that isn't billed, those hours are pure cost — your tech is burning productive capacity fixing something for free. This calculator treats callbacks as a reduction in effective productive hours, which pushes true cost per hour up. Ignoring it is how contractors convince themselves a job priced at $85/hr is profitable when it really isn't.
Your billable hourly rate has to cover true cost per hour plus overhead per hour plus your target profit margin. If your tech truly costs $42/hr, your overhead adds another $25/hr, and you want a 20% net margin, you need to bill roughly $84/hr on service labor just to hit the target. Most contractors undercut themselves because they price against their base wage ($25/hr) instead of their burdened rate. Once the math is in front of you, you can fix it — start with our pricing workshop to run the full picture.