Contract Manufacturing, Job Shop Quoting & Make-to-Order calculator
Labor Hour Rate Calculator
Use this calculator to convert wages, payroll burden, benefits, supervision, training, and indirect labor recovery into an effective labor rate per billable direct labor hour.
What this calculator does
- Calculate loaded labor-hour rate for estimating custom work.
- pricing hands-on fabrication, assembly, inspection, programming, or setup labor in quotes
- The result estimates the labor-hour rate for quote costing.
Formula used
- base labor-hour rate = recoverable labor cost pool ÷ billable direct labor hours
- effective labor-hour rate after utilization = base labor-hour rate × direct labor utilization factor
Inputs explained
- recoverable labor cost pool: Include wages, payroll tax, benefits, training, supervision, paid time off, indirect labor allocation, and profit if included in labor rate.
- billable direct labor hours: Use hours expected to be chargeable to customer jobs after non-billable meetings, rework decisions, cleanup, and support tasks.
- direct labor utilization factor: Use the realistic percentage of paid labor hours that can be billed to orders.
How to use the result
- Use it to price labor steps, check overtime economics, compare departments, and update routing standards.
- Treat the result as an estimate until the RFQ package, customer drawing revision, material quote, routing, setup standard, shop rate, outside service quote, scrap history, open capacity, due date, and quoted commercial terms are confirmed for the same job, lot size, and customer order.
Common questions
- What is the labor hour rate calculator for? Use this calculator to convert wages, payroll burden, benefits, supervision, training, and indirect labor recovery into an effective labor rate per billable direct labor hour.
- What information should I enter? Enter recoverable labor cost pool, billable direct labor hours, and direct labor utilization factor using the same estimating period, shop calendar, cost pool, or customer-order scope.
- What does the result tell me? The result estimates the labor-hour rate for quote costing.
- When is the result only an estimate? Treat the result as an estimate until the RFQ package, customer drawing revision, material quote, routing, setup standard, shop rate, outside service quote, scrap history, open capacity, due date, and quoted commercial terms are confirmed for the same job, lot size, and customer order.
Last reviewed 2026-05-12.