This calculator helps auto repair shop owners determine a profitable hourly labor rate by factoring in direct costs, overhead expenses, and desired profit margin.
function calculateLaborRate() {
var directLaborCost = parseFloat(document.getElementById("directLaborCost").value);
var partsMarkupPercentage = parseFloat(document.getElementById("partsMarkupPercentage").value);
var overheadPerBillableHour = parseFloat(document.getElementById("overheadPerBillableHour").value);
var desiredProfitPercentage = parseFloat(document.getElementById("desiredProfitPercentage").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
if (isNaN(directLaborCost) || isNaN(partsMarkupPercentage) || isNaN(overheadPerBillableHour) || isNaN(desiredProfitPercentage)) {
resultDiv.innerHTML = "Please enter valid numbers for all fields.";
return;
}
if (directLaborCost < 0 || partsMarkupPercentage < 0 || overheadPerBillableHour < 0 || desiredProfitPercentage < 0) {
resultDiv.innerHTML = "All input values must be non-negative.";
return;
}
// Calculate cost of parts including markup
// This is often a multiplier, so we assume the markup applies to the cost of parts the shop buys.
// For labor rate calculation, we focus on the labor cost + overhead + profit.
// The parts markup is more for pricing of the service as a whole, but influences the shop's overall financial health.
// For direct labor rate, we'll focus on covering direct labor, overhead, and profit.
// Formula to calculate the target revenue needed per billable hour to achieve desired profit.
// var L = Direct Labor Cost per Hour
// var O = Overhead per Billable Hour
// var P = Desired Profit Percentage
// var R = Required Labor Rate per Hour
// The total cost for the shop per billable hour is L + O.
// The profit should be a percentage of the final labor rate.
// So, R = (L + O) + (R * P/100)
// R – (R * P/100) = L + O
// R * (1 – P/100) = L + O
// R = (L + O) / (1 – P/100)
var profitMarginDenominator = 1 – (desiredProfitPercentage / 100);
if (profitMarginDenominator <= 0) {
resultDiv.innerHTML = "Desired profit percentage must be less than 100%.";
return;
}
var requiredLaborRate = (directLaborCost + overheadPerBillableHour) / profitMarginDenominator;
// The parts markup itself doesn't directly factor into the HOURLY LABOR RATE calculation,
// but it's crucial for the shop's profitability. We'll display it separately.
resultDiv.innerHTML = "
Calculated Results:
" +
"Estimated Hourly Labor Rate: $" + requiredLaborRate.toFixed(2) + "" +
"Note: This rate is calculated to cover direct labor costs, overhead per billable hour, and achieve your desired profit margin on labor. The parts markup percentage is crucial for overall shop profitability and is applied to parts costs separately.";
}