Work out the hourly rate to charge for an employee's labour, built up properly from what they cost you, the hours they're actually productive, your overheads and a profit. The number most firms guess, and get wrong.
Drop the productive hours or forget the overhead and the rate falls fast. That gap is exactly where a busy firm still loses money on labour.
Worklot holds your labour rates and drops them into quotes and jobs automatically, so every hour is priced to make money, not just cover the wage. Built for small trade and engineering firms.
Ask most firms what they charge for labour and the number came from somewhere between a guess and what the last place charged. But a labour rate that actually pays has four parts stacked on top of each other, and skipping any one of them is money left on the table.
This is where the biggest error hides. If you take a £38,400 loaded cost and divide by 1,950 paid hours you get about £19.70 an hour. Divide the same cost by 1,600 genuinely productive hours and it's £24. That's before a penny of overhead or profit. Charge the £19.70 version and you're subsidising every job, because nobody bills 100% of the hours they're paid for.
Once you've added overhead recovery you have a break-even rate: the point where the hour costs you nothing and earns you nothing. Your charge-out rate sits above it. The markup you add is the profit, and it's the difference between being busy and being profitable. Not sure markup from margin? The markup vs margin calculator untangles it.
Employees and team labour. If you're a sole trader working out what to charge for your own day, the day rate calculator is the better fit. Both work on the same idea: cost the time honestly, then price above it.
Work from paid hours and take off the time that isn't billable. A 37.5-hour week is about 1,950 paid hours a year. Knock off 5 to 6 weeks for holiday and bank holidays, then more for sickness, training and travel, and most trades land between 1,500 and 1,700 genuinely productive hours.
Add up your annual fixed overheads, premises, insurance, vehicles, admin, software, and divide by the total productive hours across everyone who bills time. That gives a per-hour figure to recover on each labour hour. If you're not sure, £10 to £15 an hour is a common starting point for a small firm.
No. This is the labour rate only. Materials get added to a job separately, usually with their own markup. Keeping labour and materials apart is what lets you see whether it's the rate or the buying that's squeezing a job.
A free tool for general guidance, not financial advice. On-costs, productive hours and overheads vary by firm; use your own figures and check anything important with your accountant.
Quotes, jobs, invoices and getting paid, in one place. Your data, your keys, no lock-in.