.shop-calc-container {
max-width: 800px;
margin: 0 auto;
font-family: -apple-system, BlinkMacSystemFont, "Segoe UI", Roboto, Helvetica, Arial, sans-serif;
color: #333;
background: #f9f9f9;
padding: 30px;
border-radius: 8px;
box-shadow: 0 4px 15px rgba(0,0,0,0.1);
}
.shop-calc-header {
text-align: center;
margin-bottom: 30px;
}
.shop-calc-header h2 {
margin: 0;
color: #2c3e50;
font-size: 28px;
}
.shop-calc-grid {
display: grid;
grid-template-columns: 1fr 1fr;
gap: 20px;
}
@media (max-width: 600px) {
.shop-calc-grid {
grid-template-columns: 1fr;
}
}
.shop-input-group {
margin-bottom: 15px;
}
.shop-input-group label {
display: block;
font-weight: 600;
margin-bottom: 5px;
color: #555;
}
.shop-input-group input {
width: 100%;
padding: 12px;
border: 1px solid #ddd;
border-radius: 4px;
font-size: 16px;
box-sizing: border-box;
}
.shop-input-group input:focus {
border-color: #3498db;
outline: none;
box-shadow: 0 0 5px rgba(52,152,219,0.3);
}
.shop-calc-btn {
grid-column: 1 / -1;
background-color: #3498db;
color: white;
border: none;
padding: 15px;
font-size: 18px;
font-weight: bold;
border-radius: 4px;
cursor: pointer;
transition: background 0.3s;
margin-top: 10px;
width: 100%;
}
.shop-calc-btn:hover {
background-color: #2980b9;
}
.shop-results {
grid-column: 1 / -1;
background: #fff;
padding: 25px;
border-radius: 6px;
border: 1px solid #e1e1e1;
margin-top: 20px;
display: none;
}
.shop-result-item {
display: flex;
justify-content: space-between;
align-items: center;
padding: 12px 0;
border-bottom: 1px solid #eee;
}
.shop-result-item:last-child {
border-bottom: none;
}
.shop-result-label {
font-weight: 500;
color: #666;
}
.shop-result-value {
font-weight: 700;
font-size: 18px;
color: #2c3e50;
}
.shop-final-rate {
margin-top: 15px;
padding-top: 15px;
border-top: 2px solid #3498db;
color: #3498db;
font-size: 24px;
}
.shop-article {
max-width: 800px;
margin: 40px auto;
line-height: 1.6;
color: #444;
}
.shop-article h2 {
color: #2c3e50;
border-bottom: 2px solid #eee;
padding-bottom: 10px;
margin-top: 40px;
}
.shop-article h3 {
color: #34495e;
margin-top: 25px;
}
.shop-article ul {
margin-bottom: 20px;
}
.shop-article li {
margin-bottom: 8px;
}
.tooltip {
font-size: 12px;
color: #888;
font-weight: normal;
margin-left: 5px;
}
function calculateShopRate() {
// 1. Get input values
var overhead = parseFloat(document.getElementById('monthlyOverhead').value);
var techs = parseFloat(document.getElementById('numTechs').value);
var wage = parseFloat(document.getElementById('avgHourlyWage').value);
var hours = parseFloat(document.getElementById('hoursPerMonth').value);
var efficiency = parseFloat(document.getElementById('efficiencyRate').value);
var margin = parseFloat(document.getElementById('targetMargin').value);
// 2. Validate inputs
if (isNaN(overhead) || isNaN(techs) || isNaN(wage) || isNaN(hours) || isNaN(efficiency) || isNaN(margin)) {
alert("Please fill in all fields with valid numbers.");
return;
}
if (efficiency <= 0 || hours <= 0 || techs = 100) {
alert("Profit margin must be less than 100%.");
return;
}
// 3. Perform Calculations
// Total Available Clock Hours (Total capacity)
var totalClockHours = techs * hours;
// Total Billable Hours (Capacity adjusted for efficiency)
var totalBillableHours = totalClockHours * (efficiency / 100);
// Total Labor Cost (We pay techs for clock hours, not just billable hours)
// Note: You could add a 'labor burden' % here (taxes/benefits), but we'll stick to raw wage input for simplicity or assume user included burden in wage.
var totalLaborCost = totalClockHours * wage;
// Total Monthly Cost to operate shop
var totalMonthlyExpenses = overhead + totalLaborCost;
// Break-Even Rate (Cost / Billable Hours)
// This is what you must charge just to pay bills and techs, making $0 profit.
var breakEvenRate = totalMonthlyExpenses / totalBillableHours;
// Target Shop Rate using Margin formula: Price = Cost / (1 – Margin%)
// Example: If cost is $80 and margin is 20%, Price = 80 / 0.8 = $100.
var targetShopRate = breakEvenRate / (1 – (margin / 100));
// 4. Update UI
document.getElementById('resultsArea').style.display = 'block';
document.getElementById('displayOverhead').innerHTML = '$' + overhead.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('displayLabor').innerHTML = '$' + totalLaborCost.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('displayTotalExpenses').innerHTML = '$' + totalMonthlyExpenses.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('displayBillableHours').innerHTML = totalBillableHours.toFixed(1) + ' hrs';
document.getElementById('displayBreakEven').innerHTML = '$' + breakEvenRate.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('displayShopRate').innerHTML = '$' + targetShopRate.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
}
How to Calculate Your Shop Rate Correctly
Whether you run an automotive repair shop, a machine shop, or a managed IT service, calculating your hourly shop rate is the single most critical financial exercise for your business. Setting a rate based on what your competitors charge is a recipe for failure. Your shop rate must reflect your unique overhead, labor costs, and efficiency levels.
This calculator uses a comprehensive "Bottom-Up" approach to determine the exact hourly rate you need to charge to cover all expenses and achieve your desired profit margin.
The 3 Core Components of Shop Rate
To accurately calculate your rate, you must understand the three distinct factors that drive your costs:
- Fixed Overhead: These are expenses that exist regardless of whether you have work or not. Examples include rent, property taxes, software subscriptions, insurance, utilities, and administrative salaries.
- Labor Cost & Burden: This is the cost of your technicians. Crucially, you pay technicians for the hours they are clocked in, but you can only charge customers for the hours that are billed.
- Efficiency (The "Billable" Factor): No human works 100% of the time. Technicians spend time cleaning, moving equipment, attending meetings, or waiting for parts. The industry average for efficiency (billable hours / clock hours) often hovers between 70% and 85%.
The Formula Explained
The math behind the calculator follows a logical progression:
1. Determine Total Operating Cost
First, sum your monthly overhead and your total labor cost.
Total Cost = Monthly Overhead + (Number of Techs × Wage × Clock Hours)
2. Calculate Total Billable Hours
Adjust your available hours by your efficiency rating.
Billable Hours = (Number of Techs × Clock Hours) × Efficiency %
3. Find the Break-Even Rate
This is the minimum you must charge to not lose money.
Break-Even Rate = Total Cost / Billable Hours
4. Apply Profit Margin
Finally, markup the break-even rate to hit your profit goal. Note that we calculate Margin, not Markup. A 20% margin means 20% of the final price is profit.
Shop Rate = Break-Even Rate / (1 – Desired Margin %)
Example Calculation
Let's look at a realistic scenario for a small auto shop:
- Overhead: $6,000/month
- Technicians: 2
- Wage: $30/hour
- Hours: 160 per tech/month
- Efficiency: 75%
Step 1: Labor Cost. 2 techs × 160 hours × $30 = $9,600.
Step 2: Total Cost. $6,000 (Overhead) + $9,600 (Labor) = $15,600.
Step 3: Billable Hours. 320 total hours × 0.75 = 240 billable hours.
Step 4: Break-Even. $15,600 / 240 hours = $65.00/hour.
Step 5: Target Rate (20% Margin). $65.00 / (1 – 0.20) = $65.00 / 0.8 = $81.25/hour.
Why Efficiency Kills Profitability
If you underestimate your efficiency, your shop rate calculation will be wrong. If you assume your technicians are 100% efficient, you will calculate a lower shop rate. However, when they only bill 75% of the time, you will fail to cover your overheads. It is always safer to estimate a lower efficiency rate (conservative estimate) to ensure your calculated rate covers the downtime that inevitably occurs in a workshop.
Frequently Asked Questions
Should I include parts profit in this calculation?
Generally, no. Your hourly labor rate should be sufficient to sustain the business on its own. Profit from parts or materials should be considered a bonus or a separate profit center, not a subsidy for an underpriced labor rate.
What is a good profit margin?
For service businesses and workshops, a net profit margin of 10% to 20% is considered healthy. However, this varies by industry. Specialized machine shops may command higher margins than general repair shops.
How often should I recalculate my shop rate?
You should review this calculation annually or whenever significant changes occur, such as hiring new staff, giving raises, rent increases, or purchasing expensive new equipment that increases your monthly overhead.