Free workshop labour rate calculator
Estimate your labour rate from your team's hours, wages, overheads and parts gross profit. The calculation runs in your browser. If you request a review below, we'll receive your figures and contact details.
Worked example: a three-technician workshop
These are illustrative assumptions, not an Australian industry benchmark. Three technicians work 38 hours a week for 46 weeks. At 75% productivity, the workshop sells 3,933 of its 5,244 working hours.
- Employment cost per working hour
- $48.00
- Annual technician employment cost
- $251,712
- Monthly fixed overheads
- $14,000
- Monthly parts gross profit
- $6,000
- Annual overheads still carried by labour
- $96,000
- Break-even rate, ex GST
- $88.41/hr
- Target margin on labour revenue
- 15%
- Target charge-out rate, ex GST
- $104.01/hr
- Target charge-out rate, inc GST
- $114.41/hr
The remaining overhead is ($14,000 − $6,000) × 12 = $96,000. Add technician costs, divide by sold hours, then divide by 0.85 to allow a 15% margin on labour revenue. A 15% margin is different from adding a 15% markup to cost.
This replaces the current calculator inputs with the example above.
How the calculation works
- 01
Count rostered working hours
Multiply technicians by weekly working hours and working weeks. Use a wage cost per working hour that includes the annual cost of paid leave and applicable on-costs.
- 02
Work out the hours you actually sell
Multiply rostered working hours by productivity. Time spent on tasks such as training or waiting on parts can reduce the hours you sell.
- 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 margin on labour revenue to get the rate you should charge.
02How do I measure technician productivity?+
Divide the hours sold by the rostered working hours in the same period, then multiply by 100. For example, 30 sold hours out of 40 working hours is 75%. Use your own records and apply the same treatment of leave and non-billable time in both the inputs and the comparison.
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.