Labor Rate Calculator for Heavy-Duty Repair Shops

Add up what a month of tech labor costs you, wages plus payroll burden, and the share of overhead labor has to carry. Divide that by the hours you actually bill in a month. That's your break-even rate. Divide break-even by 1 minus your target margin and you have the rate you should post. The calculator above does all of it, and the math section shows each step.

It's what you actually collect per billed hour. Take last month's labor revenue and divide it by labor hours billed. If the sign says $150 and you collect $128, your effective labor rate is $128, and that's the number paying your techs.

Money slips out between the rate on the wall and the invoice. Discounts for your best fleet customers. Comebacks you fix for free. Warranty claims paid at a lower rate or on flat hours. And the big one: hours a tech clocked on a job that never made it onto the invoice. Each looks small on its own. Together they can cost a 4-tech shop thousands a month.

Typical heavy-duty shops bill 70% to 75% of paid hours. Shops with loose time tracking often run far lower, 30% to 50%, without knowing it. If your techs punch the time clock at the door but not on each job, you probably don't know your real number yet.

Having labor carry 100% of overhead is the safer call. Parts margin then becomes profit on top. If your parts business is steady and marked up well, you can let it carry some of the overhead and lower the slider. Just remember parts sales drop in a slow month and your rent doesn't.

Yes. The math is the same in any currency. Enter your wages, overhead and rates in Canadian dollars and every result comes out in Canadian dollars. Canadian payroll burden with CPP, EI and WCB usually runs 18% to 25%.