Shop Rate Calculator

Work out the hourly rate your shop needs to charge to cover direct labor plus overhead and hit a target profit margin. Enter your annual overhead, the hours you can actually bill in a year, your direct labor cost, and the margin you want — it returns your break-even rate and your billable rate.

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Worked example

Overhead / billable hour: $50.00 · Break-even rate: $75.00 · Billable rate: $93.75

Learn the method

Inputs

Annual overhead $
60000
Billable hours / year
1200
Direct labor $/hour
25
Profit margin %
20

Frequently asked

Why is my rate so much higher than the wage I pay?

Because the billable rate has to carry ALL your overhead (rent, insurance, tools, admin, downtime) spread over only your billable hours, plus profit — not just the wage.

What counts as 'billable hours'?

The hours you can actually charge a customer for in a year — after vacation, admin, quoting, and downtime. It is usually far less than 2,080.