What is a Labor Cost Calculator?

A labor cost calculator is an online tool to estimate the cost of labor for a specific contracting job. Widely used by contractors or small business owners, it takes into account various factors, such as hourly wages, benefits, taxes, workers’ compensation, job-related expenses, and overhead costs.

The calculator uses the piece of information to estimate the total labor cost for the job, which can be used for pricing decisions. With this, you can also provide accurate estimates to your clients. By considering all the relevant costs associated with a job, a labor cost calculator can help your business ensure that it covers all the expenses and you are making the desired profit.

Use the Labor Cost Calculator to Determine

  • Hourly salary of your contractors
  • Direct and indirect costs related to labor
  • Profit percentage and markup calculation

Calculate Labor Cost

Calculating profit margin and markup would be a daunting task. But with the labor cost calculator – no more a headache. Add hourly, direct & indirect costs, and profit amount to get profit margin and markup.


Number of workers Hours to complete job Hourly pay


Total cost of all job supplies used


(All monthly expenses / Working hours each month) x Hours to complete job


The net amount your business gets to keep after costs and expenses


$ 0.00

Frequently Asked Questions

Labor cost is a wide category under which all the fixed or variable expenses include, such as hiring, training, and compensating costs. Other labor cost includes:

  • Overtime
  • Training days
  • Vacation and sick days
  • Meals
  • Supplies
  • Payroll
  • Health care and benefits
  • Bonuses

The formula for calculating labor costs includes the following: Salary per hour + Direct & Indirect labor costs + Profit amount


Salary = combined hourly wages for all the contractors’

Direct labor cost = not included in the employee wages

Indirect labor costs = costs that support salaries (salary and direct cost for office)

Profit amount = net amount to run business expenses

To calculate labor costs on an hourly basis, you need to add up hourly salary, direct and indirect costs, and desired profit amount.

For instance,

  • Two employees making $10/hour sum up to $20/hour.
  • Payroll and other benefits cost $5/hour each, summing up to $10/hour.
  • Supervision and support costs are $10/hour + indirect cost of $5/hour.
  • Profit at a 10% margin, summing up to $4.5.

Your total hourly labor cost sums up to $49.5.

Multiply hourly salary, direct costs, indirect costs, and hourly profit amount.

For instance,

  • Combined hourly salary sums up to $20/hour for the two workers. You estimate the job will take two employees and four hours to complete, for a total of 10 labor hours. This means your project salary will be $200.
  • Combined $5/hour in direct costs (payroll and benefits) for these workers. Multiplied by 10 labor hours, you’ll pay $50 for the project’s direct costs.
  • Supervision and support at $20/hour in indirect costs, including your own payroll and benefits. Your role in the project (client care, team check-ins, and invoicing) will only take an hour, so your project’s indirect costs are $20.
  • Sticking with your 10% profit margin means you have to multiply by 0.10. This gives you a projected profit of $27.

Adding all the figures sums up to $297 as the total labor cost for the project.

The amount that goes towards employees’ hourly wages, direct costs, and indirect costs. Labor costs consist of 30% of the entire company’s expenses. If the labor cost percentage is too high or low, you are required to adjust wages, direct costs, and indirect costs.

United States