Labor Burden and Bill Rate
Turn an hourly wage into the bill rate that actually covers payroll burden, insurance, vehicles, and tools, and leaves the margin you picked.
Billable hours are the hours you can put on an invoice: about 1,400 a year for a full-time field employee after weather, travel, mobilization, and bench time.
How the math works
- Payroll burden: the employer side of payroll taxes and the insurance you buy for that person. FICA is 7.65%, federal unemployment is 0.6% on the first $7,000 of wages, state unemployment runs 1 to 3% in most states, and workers compensation on construction classification codes runs from about 1% on clerical to well over 6% on framing and roofing. Add health, dental, and paid time off and a typical field employee lands at 25 to 40% of wage.
- Shop overhead: general liability and builders risk, tools, trucks and fuel, phones, software, safety program, and the owner time nobody bills. Take the monthly total, multiply by 12, and divide by the hours that person can actually put on an invoice.
- Break-even rate: wage + burden + overhead. Charging this pays the job and nothing else, which is how a crew stays busy all year and shows no profit at year end.
- Bill rate: break-even ÷ (1 − target margin). A 15% target on a $41.20 loaded cost is $48.47, not $47.38: the margin is a share of the price, so it is taken out of the rate you charge, not added to the cost.
- Benchmark: 2026 residential specialty contractors bill $65 to $110 per hour for a tradesperson whose loaded cost is in the $40 to $60 range. If your computed bill rate sits far under that band, check the burden percentage before you drop the price.
What is a realistic payroll burden percentage?
For a W-2 field employee in construction, 25 to 40% of wage is the working range: 7.65% employer FICA, unemployment insurance, workers compensation on the classification code, health and dental, and paid time off. A roofing or framing crew lands near the top of the range, a finished-carpentry employee nearer the middle.
How many billable hours a year should I use?
About 1,400 for a full-time field employee. Eight hours a day for 52 weeks is 4,160 gross, and weather, travel, mobilization, training, bench, and holiday take a large bite. Use 1,600 only if you have proof every hour is billable, and the rate you publish is defensible.
Should I bill by the hour or by the job?
By the job, priced from the loaded hourly cost. Hourly billing hands the customer the schedule risk, and on 2026 residential work the crews that bill by the phase are the ones that keep the margin. Use this calculator to know your floor, then price the phase.