Shop Rate Calculator
A shop has to charge enough per hour to cover its fixed costs, and only paid hours can carry them. This works out the breakeven hourly rate, then a rate with a profit target added on top.
- Free
- Works offline after your first visit
- Saves on this device
- No sign-up
- Updated
How it works
Breakeven rate is yearly overhead divided by billable hours. Billable hours are the hours customers pay for, not the hours the doors are open.
The target rate adds the profit percentage to the breakeven rate. Overhead is the yearly cost of running the shop, such as rent, insurance, tools, software and the phone.
Worked example
With $60,000.00 of yearly overhead, 1,200 billable hours and a profit target of 15%, breakeven is $50.00 an hour, and the target rate is $57.50.
Questions
Why use billable hours and not total hours?
Time spent on quotes, cleaning or waiting for parts earns nothing, so it cannot carry overhead. Billable hours give the honest divisor.
How do I estimate billable hours?
Start from the hours in a normal year, take out time that is not billed, and round down. Many shops find the number is much lower than the hours they work.
Does the rate include the worker's pay?
No. Labor cost is covered by the burdened labor calculator or the job quote. This one covers overhead and profit.
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