Burden Rate
$20.83 / hr
Add this to every labor hour you bill — covers your overhead recovery. Apply layer profit on top via the Business Profile's Profit section.Hourly Burden Rate Calculator
Pool your annual overhead into a single dollar-per-hour figure to add to every labor hour you bill, worked out from your billable hours and crew size.
Last updated August 16, 2026
Turn Annual Overhead Into a Single $/hr
Instead of itemising 10 different overheads on every estimate (and risking blowing out small jobs), pool your total annual overhead into one dollar-per-hour figure. Every billable hour pays for its share. The cleanest way to recover overhead, used by commercial contractors and recommended by the Markup & Profit method. Enter your annual overhead, your billable hours, and your crew size; get the $/hr to add to every labor hour you bill.
Pool every overhead into one $/hr. Annual overhead total ÷ annual billable hours = the single dollar-per-hour figure to add to every labor hour. The cleanest way to recover overhead — scales naturally with job time, never blows out a small job.
Annual Overhead Total
Total fixed cost of running your business for a year — insurance, marketing, software, phone, bookkeeping, equipment depreciation, consumables, quoting time, etc. Use the Fixed Cost Spreader and other overhead calculators to derive each figure, then add them up here.
Add up insurance, marketing, software, phone, bookkeeping, training, equipment depreciation, consumables, quoting time. Solo: $20–40k. Small crew: $60–120k.
Your Billable Hours
Billable hours — the ones the customer pays for. NOT the same as working hours. Most 8-hr days only have 6 billable hours after travel, set-up, breaks, and admin. Be honest — overstating this rate underprices your business.
Examples
- Solo, conservative → 5 days × 48 wks × 6 bh × 1 crew = 1,440 billable hrs/yr
- Small crew (3 fieldworkers) → 5 × 48 × 6 × 3 = 4,320 hrs/yr
- Markup & Profit textbook (3 employees) → 5 × 50 × 7.2 × 3 = 5,400 hrs/yr
Most contractors are 5; some are 5.5 or 6.
= 240 working days/year
Typical 8-hour day usually has 6 billable hours after travel, set-up, breaks, and admin. Track honestly for a month if unsure.
Only count crew billed to customers. Office staff are part of overhead, not crew.
Per Crew-Member Day$125.00
Billable Hrs/Year1,440
Working Days/Year240
Crew1
Formula: Burden = Annual overhead ÷ (Working days × Weeks × Billable hrs/day × Crew). Industry typical: solo $18–25/hr · small crew $20–30/hr · commercial trades $25–45/hr.
Pure overhead recovery — does NOT include profit. Apply profit separately in the Business Profile's Profit section (markup or margin). Do not use this on top of a labor rate that's already fully-burdened — that double-dips and over-prices your jobs.
How the Hourly Burden Rate Calculator Works
- Total your annual overhead: insurance, marketing, software, phone, bookkeeping, license/training, equipment depreciation, consumables, quoting time, etc. Use the Fixed Cost Spreader and other overhead calculators to derive each figure.
- Enter your working days and weeks worked per year. Subtract holidays and admin weeks from the 52, and most contractors land between 46 and 50.
- Enter your billable hours per day. This is NOT the same as working hours. A typical 8-hour working day usually has 6 billable hours once you subtract travel between jobs, breaks, admin, and re-work. Be honest, because overstating this rate underprices your business.
- Enter crew size: how many people are billed out on jobs. Solo = 1; if you have 2 employees + yourself doing fieldwork, that's 3.
- Read the headline: $/hr Burden. Apply it to every labor hour you bill. The Apply button writes this value into your Business Profile and switches the Overhead Recovery Strategy to "Hourly Burden" automatically.
Examples
ScenarioSolo contractor on a conservative billable assumptionInput$30,000 annual overhead · 5 days × 48 weeks · 6 billable hrs/day · 1 crewResult1,440 billable hrs/year · $30,000 ÷ 1,440 = $20.83/hr added to labor
ScenarioSmall crew of 3 fieldworkers in an established trade businessInput$80,000 annual overhead · 5 days × 48 weeks · 6 billable hrs/day · 3 crewResult4,320 billable hrs/year · $80,000 ÷ 4,320 = $18.52/hr
ScenarioMarkup & Profit textbook example (3 employees)Input$120,150 annual overhead · 5 days × 50 weeks · 7.2 billable hrs/day · 3 crewResult5,400 billable hrs/year · $120,150 ÷ 5,400 = $22.25/hr
Frequently Asked Questions
What exactly counts as "billable hours"?
Hours your customer is paying for. NOT the same as hours you spend at work. A typical 8-hour day usually has 6 billable hours once you subtract travel between jobs, set-up and pack-up, admin tasks done on the clock, breaks, and re-work. Some trades bill 7.5 (very efficient one-site jobs); others bill 5 (lots of travel, multiple stops). Track honestly for a month if you're unsure.
Why divide by billable hours instead of 8-hour working days?
Because the customer only pays for billable hours. If you divide overhead by 2,080 working hours per year but only bill 1,440 hours, you'll only recover 70% of your overhead. Dividing by billable hours guarantees you cover the full amount through what you actually charge.
What should I include in annual overhead?
Every fixed cost of running the business that isn't directly billed to a customer: public liability insurance, workers comp, vehicle running costs not billed through travel, marketing spend, software subscriptions, phone & internet, bookkeeper / accountant fees, trade license renewals, ongoing training, equipment depreciation, consumables, PPE, and the time you spend on quotes you don't win. Add the Fixed Cost Spreader, Equipment Depreciation, Consumables & PPE, Quoting Cost, and Marketing Cost outputs together.
Should I include profit in this number too?
No. Keep this calculator pure overhead. Profit is applied separately in the Business Profile's Profit section (markup or margin) on top of the cost-recovery layer. Separating the two means you can adjust profit independently per job without re-doing your burden rate.
How do I handle a crew with different roles, like apprentices, leads, and office staff?
Only count crew members who are BILLED to customers (i.e. on-site labor). Office staff are part of overhead, not crew. If you have an apprentice billed at half rate, you can either count them as 0.5 crew or treat their lower bill rate as the absorption point and exclude them here. Most solo and small-crew businesses don't need to split this fine.
How is this different from the Marketing Cost or Fixed Cost Spreader?
Those calcs work out the per-day or per-job amount for individual overhead categories. This calc bundles them ALL into one $/hr. Use the others to derive each annual figure, then total them and feed the total into this calc to get your burden rate.
What if my labor rate already includes overhead?
Then DO NOT use this calculator on top, because that would double-dip. If your hourly rate is already fully-burdened (cost + overhead + profit), keep your Overhead Recovery Strategy on "Itemized" with all rows disabled, or set this burden rate to $0. The single biggest contractor pricing mistake is recovering overhead twice (once in the rate, again in the markup).
Should small jobs and big jobs use the same burden rate?
Yes. That's the whole point. The burden rate scales naturally with job time. A 4-hour service call carries 4 × burden; a 5-day install carries 40 × burden. Big jobs absorb more overhead because they consume more of your business's time. No flat fees needed.
Important Notes
- Formula: Burden $/hr = Annual overhead ÷ (Working days × Weeks worked × Billable hrs/day × Crew size).
- Industry typical burden rates: solo contractors $18 to $25/hr · small crew $20 to $30/hr · commercial trades $25 to $45/hr.
- Combined with a base labor cost of $25/hr, that's typically a $43 to $70/hr bill rate before profit markup.
- The Markup & Profit method (Michael Stone) is the canonical reference for this approach, and it recommends baking overhead and profit BOTH into the bill rate for maximum simplicity.
- Use this calculator with the Fixed Cost Spreader and Equipment Depreciation calculators to derive your annual overhead total first.
Related Calculators
Fixed Cost Spreader CalculatorConvert annual / monthly bills into a per-day figure. Use the annual total as input here.Equipment Depreciation CalculatorCalculate the annual cost of replacing tools. Add to your overhead total.Marketing Cost Per Day CalculatorConvert marketing spend to per-day. Annual total adds to the burden calc.Profit Margin CalculatorLayer your profit markup or target margin on top of the burdened cost.