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Service labor rate calculator

For shops selling maintenance, repair, calibration, machining or installation: enter crew, tool and vehicle costs, utilization and taxes to get the hourly rate, mileage rate and minimum call-out, with a sample quote.

Pre-sizing and estimating tool: results do not replace design, calculations or reports signed by a licensed professional, nor verification against the applicable codes and standards.

Preliminary estimateRevised 11/02/2026
Technicians
Tools and instruments
Service vehicle
Company overhead
Pricing
Sample quote

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—Billable service rate per hour
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What the hourly rate is made of

Costs per billable hour (technicians, tools, overhead and vehicle if built in) and what the rate carries "built in": taxes, selling and margin.

Tap the chart to see the values.

Hourly rate vs. billable utilization

Monthly fixed costs are spread over billed hours: with fewer billed hours, each hour must cost more.

Tap the chart to see the values.

Sample quote

A job with the hours, technicians, distance and materials from "Sample quote".

Next step

Take this page’s results to another calculator with the fields already filled in.

The calculation report gathers this page's inputs, results, equations, assumptions and references, with fields for project, engineer and revision. The full report also includes the charts and interpretations, in color. In the print dialog, choose Save as PDF.

Method, assumptions and references

Equations used

Monthly cost = technicians × cost per tech + tools (V ÷ life ÷ 12 + V/2 × i ÷ 12 + calibration ÷ 12) + overhead [+ vehicle, if built in]
Billable hours = technicians × available hours × utilization; cost per hour = monthly cost ÷ billable hours
Rate = cost ÷ (1 − taxes − selling − margin); markup = 1 ÷ (1 − Σ%)
Vehicle per mile = [V·(1 − r)/life + V·(1 + r)/2·i + insurance] ÷ 12 ÷ miles/month + fuel ÷ mpg + maintenance/mile; rate/mile = cost/mile ÷ (1 − Σ%)
Break-even utilization = monthly cost ÷ (available hours × rate × (1 − taxes − selling))

Assumptions and limits

  • Monthly averages and one utilization for the crew. Tools depreciated with no salvage value; vehicle with straight-line depreciation and return on average capital. When mileage is billed separately, the vehicle is left out of the hourly rate.
  • Sales tax is treated as a percentage of the rate; income tax on profit is not included. Parts taxability depends on the state.

Standards and technical documents

  • Martins, E. Contabilidade de Custos. Atlas (formação de preço pelo markup divisor)
  • Horngren, C. T.; Datar, S. M.; Rajan, M. V. Cost Accounting: A Managerial Emphasis. Pearson (pricing decisions and cost-plus pricing)
  • Bruni, A. L.; Famá, R. Gestão de Custos e Formação de Preços. Atlas
  • Kotler, P.; Keller, K. L. Marketing Management. Pearson (cost-based and value-based pricing)

U.S. regulations

  • State sales and use tax laws (taxability of repair labor and parts varies by state)
  • Fair Labor Standards Act: overtime for non-exempt technicians, which raises the cost per billed hour

Frequently asked questions

How do I calculate a billable service rate?

Add up the month’s costs (loaded technician cost, tools, overhead and, if you choose, the vehicle), divide by the hours that will actually be billed and build in taxes, selling expenses and margin: rate = cost ÷ (1 − sum of percentages). In the example, 2 technicians billing 65% of 160 hours sell 208 hours a month at a cost of $99.36 each; with 20% built in, the rate is $124.20.

Why does billable utilization matter so much?

Because almost all cost is fixed each month: technicians are paid with or without calls. If only half the hours are billed, each billed hour must pay for the other half. In the example the rate would be $161.46 at 50% utilization and $107.64 at 75%. The company breaks even at 55% utilization at $124.20.

How should I bill travel?

Either bill mileage separately or build the vehicle into the hourly rate. Billing per mile is fairer for near and far customers: in the example the van costs $0.91 per mile and mileage is billed at $1.14 with margin built in. Technician travel time is also a cost and can be billed at the full or a reduced rate.

What is a minimum call-out charge?

The minimum hours billed on any call, because preparing the visit, loading tools and invoicing take time even on a quick job. In the example, 2 hours come to $248.40, plus travel. Preventive maintenance contracts usually have their own pricing with scheduled visits.

Do I charge sales tax on service labor?

It depends on the state: most states do not tax repair and maintenance labor, some do, and parts billed on the invoice are usually taxable. Enter the rate that applies to labor in your state, or 0%. Income tax on profit is not part of the rate calculation.

How do I read the sample quote?

A 6-hour job with 2 technicians, 40 miles away with 1 hour of travel each way and $300 of parts comes to $2,438.10: labor, travel time, mileage and parts with a 20% markup. After commissions, $354 is left as profit, 14.5% of the invoice.

What are the limits of this calculator?

It uses monthly averages and a single utilization for the whole crew. It does not separate regular, overtime and weekend hours or price specialties and emergency calls differently; work those out from your own cost. Defaults are illustrative: use your company’s figures.