Your numbers
Rent, utilities, insurance, software, admin wages, loan payments.
Total productive labour cost including payroll taxes and benefits.
Full-time equivalents.
40 hours a week is roughly 173 hours a month.
Share of paid hours you actually invoice. Most shops land at 65–85%.
Profit you want left after overhead and wages are covered.
Target hourly rate
$78.61
Break-even is $62.89 per hour. Anything below that loses money on every job you write.
- Billable hours / month
- 374
- Unbillable hours / month
- 145
- Total monthly cost
- $23,500.00
- Labour revenue at target
- $29,375.00
- Monthly labour profit
- $5,875.00
- Break-even rate
- $62.89/h
Figures are an estimate based on the inputs above and exclude parts sales, taxes and sublet work. Nothing is sent anywhere — the maths runs in your browser.
How the calculation works
- 1. Add your monthly cost. Fixed overhead plus fully loaded technician wages. That is the number your labour hours must cover.
- 2. Find real billable hours. Technicians × paid hours × billable efficiency. This is the step most shops skip, and it is why posted rates come out too low.
- 3. Divide for break-even. Total cost ÷ billable hours = the rate at which you make nothing.
- 4. Add margin. Break-even ÷ (1 − target margin) gives the posted rate. Dividing, not multiplying, is what actually leaves the margin intact.
Raising billable efficiency by a few points moves the needle as hard as a rate increase — and it is easier to sell to customers. Accurate job cards, technician clock-in and per-technician reporting are how you measure it, which is what ShopTop's auto repair shop software does out of the box.
Questions
Labour rate questions
- How is a shop labour rate calculated?
- Add your monthly overhead and technician wages, work out how many hours you can actually bill after efficiency losses, then divide total cost by billable hours and add your target profit margin. That break-even plus margin figure is your hourly rate.
- What is billable (or effective) efficiency?
- A technician paid for 173 hours a month rarely bills all of them — clean-up, road tests, comebacks and waiting for parts eat into it. Most shops bill 65–85% of paid hours, so the calculator asks for that percentage instead of assuming 100%.
- Should parts markup be part of the labour rate?
- No. Keep them separate: the labour rate must cover overhead and wages on its own, so parts gross profit stays a buffer rather than a crutch. This calculator only prices labour.
- How often should I revisit my rate?
- At least twice a year, and any time rent, wages, insurance or your bay count changes. Track posted hours against billed hours in your shop software so the inputs stay honest.
- Does ShopTop track this for me?
- Yes — technician clock-in, labour lines on every job card and the reports view show billed hours and revenue per technician, which are exactly the inputs this calculator needs.
Measure the hours behind the rate
ShopTop tracks billed labour, technician time and shop profitability so your next rate review starts from real numbers. Free for a single-bay shop.