Work out labour hour rate instantly with clear inputs, formula shown and shareable results.
The charge-out rate must recover the technician's fully loaded cost plus allocated overhead across billable hours only — typically 1,400-1,600 of the 2,080 paid hours. Dividing by paid hours rather than billable hours is the classic error that leaves a service business unprofitable.
Cost per billable hour
Cost per hour = (Technician cost + Allocated overhead) / Billable hours
Charge-out rate
Rate = Cost per billable hour / (1 - Target margin %)
Because of leave, training, travel between jobs, quoting, van maintenance and administration. Seventy percent billable is a good result.
Yes for pricing purposes. Total overhead divided by the number of technicians is crude but far better than ignoring it.