Accurately estimating electrical labor is crucial for competitive bidding and profitable projects. Use this tool to calculate your total estimated labor cost and the final project bid based on your rates, hours, overhead, and profit markup.
Electrical Labor Cost Calculator
Electrical Labor Cost Calculator Formula
1. Direct Labor Cost (DL) = Hourly Rate x Estimated Hours
2. Total Labor Cost (L) = DL x (1 + Labor Overhead Factor)
3. Final Project Bid (T) = L + (Material Cost x (1 + Profit Markup))
Formula Source: Forbes Advisor – Overhead Costs, EC&M – Labor Burden
Variables
- Hourly Labor Rate: The base cost per hour for the electrician performing the work, before overhead.
- Estimated Labor Hours: The total time (in hours) the project is expected to take.
- Labor Overhead/Burden Factor: The percentage (as a decimal) representing non-wage costs like taxes, insurance, benefits, and administrative expenses.
- Estimated Material Cost: The total cost of wires, conduits, devices, and other physical components required for the job.
- Profit Markup Percentage: The percentage (as a decimal) added to the materials and labor to ensure the company makes a profit.
What is an Electrical Labor Cost Calculator?
An Electrical Labor Cost Calculator is an essential tool for electrical contractors, estimators, and project managers. Its primary purpose is to provide a comprehensive, accurate estimate of the true cost of labor for any electrical installation or repair project. Unlike simply multiplying an hourly rate by hours, a professional calculator incorporates the often-overlooked financial realities of running a business, such as overhead and profit requirements.
The total cost of an electrician is far more than just their wage. Labor burden—or overhead factor—includes payroll taxes, workers’ compensation insurance, health benefits, and even non-billable time. Neglecting this crucial factor can lead to severely underpriced bids and project losses. This calculator ensures that all these costs are accounted for, providing a healthy foundation for the final project bid.
How to Calculate Electrical Labor Cost (Example)
- Determine Direct Labor Cost: An electrician with an hourly rate of $50 works 30 hours. $50 x 30 hours = $1,500.
- Apply Labor Overhead: If the overhead factor is 18% (0.18), the fully burdened labor cost multiplier is 1.18. Total Labor Cost = $1,500 x 1.18 = $1,770.
- Add Material Cost: Assume the project requires $800 in materials.
- Calculate Final Project Bid: The company requires a 25% (0.25) profit markup. Total Project Bid = $1,770 (Labor) + ($800 Material x 1.25) = $1,770 + $1,000 = $2,770.
Frequently Asked Questions (FAQ)
What is the difference between an hourly rate and a burdened hourly rate?
The hourly rate is the base wage paid to the worker. The burdened hourly rate is the total cost to the company for that worker, including wages, benefits, payroll taxes, insurance, and other overhead costs, which is typically 1.25 to 1.45 times the base rate.
Why is the Profit Markup applied to materials?
It is standard practice to apply a markup to materials (often 10% to 30%) to cover the administrative costs associated with purchasing, stocking, transporting, and managing those materials, as well as to contribute to the company’s overall profit margin.
What is a typical Labor Overhead Factor?
The labor overhead factor (or burden) varies widely but often falls between 15% (0.15) and 45% (0.45), depending on the size of the company and the generosity of its benefits package. Contractors must calculate their unique factor based on their business’s specific expenses.
How often should I review my labor costs?
It is recommended to review and update your hourly rate, overhead factor, and markup at least annually, or immediately following any significant change in business expenses, insurance rates, or employee compensation.