Margin Drivers AcademyModule 2 · Price for profitLesson 5 of 22
Pricing 101
True Cost of Labor
A $25 wage really costs $30 an hour.
The wage on the paycheck is not what an hour of field labor costs you. Taxes, insurance, paid time off and unbilled drive time ride along with every hour. Here is how one crew member's $25 wage becomes $30.
A $25 wage really costs $30 an hour
Example: one crew member, per billable hour- Base wage
- Payroll taxes
- Workers' comp
- Vacation / sick
- Travel & lot time
What goes into one hour
Base Wage
What shows on the employee's paycheck.
per hour$25.00
100%of wage
Payroll Taxes
Employer's share of Social Security and Medicare, plus federal and state unemployment.
per hour$2.25
9%of wage
Workers' Comp
Insurance for on-the-job injuries. Rates vary by job type and state.
per hour$1.25
5%of wage
Vacation & Sick Pay
Hours you pay for that nobody works.
per hour$0.25
1%of wage
Travel & Lot Time
Paid time loading up, driving and fueling that no customer is billed for.
per hour$1.25
5%of wage
Loaded Labor Cost
What one hour of field labor actually costs you. The extra 20% is your labor burden.
per hour$30.00
120%of wage
Why it matters
It adds up fast
At 1,000 crew hours a month, the burden is
$5,000 / mo
or $60,000 a year that never shows up on a timecard.
Price the $30, not the $25
An 80-hour job estimated at $25/hr shows $2,000 of labor. Its real cost is $2,400. Estimate with the loaded rate every time.
Your burden may be higher
Add anything else you pay per employee: health insurance, retirement match, uniforms and safety gear, training, phones.
Your numbers
Starts with the example crew memberBase wage × (1 + burden) = loaded cost
Enter a wage and your labor burden. The example's 20% is payroll taxes 9% + workers' comp 5% + vacation/sick 1% + travel & lot time 5%.
Margin Drivers calculator · Go further
Windshield time
What drive time between stops really costs your crews, and what tighter routes save.
Open the windshield time