Labor Rate Calculator

1. Enter your base electrician wage. This is the hourly rate you pay a journeyman or apprentice before any extras. If you pay different rates, use the average across your team.

2. Set the burden rate. This covers everything on top of wages: employer payroll taxes, workers comp, health insurance, retirement match, uniforms, and continuing education. Most electrical contractors land between 28-42%.

3. Input PTO hours per year. Count vacation, sick days, holidays, and training days. Four weeks (160 hours) is standard. This reduces your available billing hours.

4. Set your utilization rate. This is the percentage of available hours your electricians actually spend on billable work. The rest goes to drive time, pulling permits, inspections, paperwork, and downtime. 45% is realistic for residential service.

5. Enter your team size and overhead. Annual overhead includes rent, trucks, insurance, software, marketing, office staff, tool replacement, licensing fees, and everything else that is not direct labor or materials.

6. Choose your profit margin. This is the net margin you want after covering all costs. 15-25% is the target range for healthy electrical contracting businesses.

This calculator uses the multi-step cost-plus method that electrical business coaches and industry consultants recommend. It builds your rate from the bottom up so every dollar of cost is covered.

Step 1 -- Loaded Wage. Take the base wage and add the burden rate. A $32/hr electrician with 32% burden actually costs you $42.24/hr when you factor in taxes, insurance, and benefits.

Step 2 -- Available Hours. Start with 2,080 annual work hours (40 hrs/week x 52 weeks) and subtract PTO. This gives you the hours an electrician is actually working.

Step 3 -- Billable Hours. Multiply available hours by the utilization rate. This is the number of hours you can actually charge customers for. The gap between available and billable hours is where most shops lose money.

Step 4 -- Overhead Per Hour. Divide total annual overhead by all electricians' combined billable hours. This tells you how much overhead each billable hour needs to carry.

Step 5 -- Break-Even Rate. Add the loaded wage and the overhead per hour. This is the minimum you must charge to not lose money -- zero profit.

Step 6 -- Billable Rate. Divide the break-even rate by (1 minus your profit margin). A 20% margin means dividing by 0.80. This is the rate you actually charge customers.

Setting flat rate prices. Your flat rate book is built on a labor rate. If that rate is wrong, every single price in the book is wrong. Run this calculator first, then build your electrical price book on top of the result.

Annual rate review. Costs go up every year -- insurance premiums, fuel, wages, material costs. Most shops set their rate once and forget it. Run this every January with updated numbers to make sure you are not falling behind.

Hiring decisions. Before adding an electrician, plug in the new team size and see how it changes your overhead per hour and required rate. More electricians spread overhead thinner, but only if utilization stays the same.