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True labour cost calculator

Find what an hour of work actually costs your business — wages plus employer on-costs, spread over the hours someone really works and the share of time that's productive — the number your job pricing should use.

Labour cost

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Why the headline wage is never the real rate

Someone on £28,000 at 40 hours a week looks like £13.46/hour. But the business also pays on-costs (say 15% — £32,200 total), and they're actually at work fewer hours than contracted once 28 days of holiday and a few sick days come out (1,824 of 2,080 hours). That's already £17.65 per worked hour.

Then only part of a worked hour is productive: machines get cleaned, quotes get written, deliveries get signed for. At 75% productive utilisation, the cost per productive hour is £23.54 — about 1.75× the headline wage. If your job pricing charges labour at £13.46, every job is subsidised.

Using the result

Use cost per productive hour as the labour rate in the job profit calculator, or add a margin on top of it if you want labour itself to be profitable. The multiplier output is a useful rule of thumb for quick quotes: headline wage × multiplier ≈ true rate.

Assumptions

  • The 15% on-costs default is an illustrative starting point, not a statutory rate.

    Basis: Employer contributions differ by country, salary level, and pension scheme — take the real percentage from your payroll.

  • A working day is contracted weekly hours ÷ 5.

    Basis: Simplification for converting days off into hours; adjust weekly hours if your pattern differs.

  • The 75% productive-share default assumes a hands-on production role.

    Basis: Editorial default — measure a typical week if you can; owners who also quote and do admin are often below 60%.

Limitations

  • An estimate for pricing, not payroll or tax guidance.
  • Doesn't model overtime, seasonal patterns, or training time separately — fold them into the productive share.

Common questions

What on-costs percentage should I use?

Take it from your own payroll: employer social contributions plus pension plus any benefits, divided by gross pay. It varies by country and salary level, so the calculator deliberately doesn't hardcode a statutory rate.

Does this apply to my own time as an owner?

Yes — decide the salary you should be paid, and run it through. Owners who price their own hours at zero build businesses that can't afford to employ their replacement.

Last reviewed 2026-07-17 · Maintained by the damantra team. This resource is editorial guidance based on established industry practice — it contains no manufacturer specifications. Spotted an error? Tell us.

Turn these numbers into quotes customers can approve

damantra takes the pricing you work out here and runs the whole job — quote, approval, production board, portal, invoice — in one calm system.