Free workshop tool
Free workshop labour rate calculator
Most workshops set their charge-out rate by looking at the shop down the road. This works it out from your hours, your productivity, your wages and your overheads instead. It is free and there is nothing to sign up for — everything is calculated in your browser, so nothing is sent to us and nothing is stored.
How the calculation works
- 01
Count the hours you pay for
Technicians multiplied by rostered hours multiplied by working weeks. This is the wage bill you carry whether or not the work comes in.
- 02
Work out the hours you actually sell
Paid hours multiplied by productivity. Clean-up, training, warranty rework and waiting on parts never reach an invoice, so they cannot be used to recover cost.
- 03
Add the overheads labour has to carry
Fixed monthly overheads minus the gross profit your parts sales already contribute, annualised. Parts profit that is already covering rent should not be recovered a second time through the labour rate.
- 04
Divide cost by sold hours, then add margin
Total cost divided by sold hours gives break-even. Dividing that by one minus your target margin gives the rate that leaves the profit you asked for. GST is added at the end.
This calculator is general information, not financial or tax advice. It does not know your award obligations, finance costs, depreciation or tax position. Confirm your rate with your accountant before you change what you charge.
Common questions
01How do I calculate a workshop labour rate?+
Add your annual technician wage cost to the overheads that labour has to recover, then divide by the hours you actually sell rather than the hours you pay for. That gives a break-even rate. Divide the break-even rate by one minus your target net margin to get the rate you should charge.
02What is a good productivity rate for a workshop technician?+
Productivity is sold hours divided by paid hours. Many Australian workshops sit between 65 and 85 per cent once you account for leave, training, clean-up, warranty rework and waiting on parts. Measuring your own figure matters more than matching a benchmark, because it is the single number with the biggest effect on your required rate.
03Should the labour rate include GST?+
Quote retail customers a GST-inclusive price, because that is the number they expect to pay. Calculate the rate excluding GST first, then add ten per cent. This calculator shows both so you can set the ex-GST rate internally and display the inclusive rate on the counter.
04Why does parts gross profit change my labour rate?+
Overheads have to be recovered by the business, not specifically by labour. If parts already contribute gross profit each month, that profit covers part of the rent, power and insurance, so labour has less to carry. Entering your parts gross profit gives a realistic rate instead of an inflated one.