How it works
Use the result as a checked starting point.
An employee earning $28 per hour costs the business more than $28 per hour. Labor burden closes the gap between payroll wage and the hourly cost that belongs in an estimate.
Use rates from your payroll records, insurance policy, benefit invoices, and overhead budget. Workers’ compensation rates vary sharply by state and class code, so an actual policy rate is more useful than an industry average.
Loaded hourly cost = wage + payroll costs + workers’ comp + PTO + benefits + allocated overhead.
Estimating checks
- Update insurance and tax rates when policies renew.
- Allocate nonbillable supervision and office time through overhead.
- Use the loaded result as labor cost—not necessarily as your customer billing rate.
Common questions
What counts as labor burden?
Payroll taxes, workers’ compensation, benefits, paid leave, and other employee costs beyond base wage.
Why include overhead per hour?
Office, vehicle, software, supervision, and facility costs still have to be recovered through billable work.
Is the loaded rate my selling rate?
No. Your selling rate must also provide profit and account for nonbillable capacity.