What should my shop charge an hour?
Your own numbers, worked through to the rate you have to post. Free, no sign-up, nothing stored.
Shop labor rate worksheet
Worked out from your own numbers at preferredmechanic.com. No rate data was used.
| How you pay your techs | Hourly |
| Technicians | 2 |
| What you pay a tech, per clocked hour | $30.00 |
| What payroll taxes and benefits add on top | 26.0% |
| Of every clocked hour, how much do you sell | 78.0% |
| Shop overhead, per month | $12,000.00 |
| Profit you want on labor revenue | 15.0% |
| Hours a week a tech is on the clock | 40 |
| Weeks a year a tech is paid for | 50 |
| Your discount, fleet and warranty hours | 75.0% at 100%, 15.0% at 90%, 8.0% at 65%, 2.0% at 0% |
| Parts gross profit that already helps pay overhead | $0.00 |
| Diagnostic hours | off |
| Bays | off |
| What you charge today | $105.00 |
Restored from the link. Nothing was sent anywhere to do that.
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Where every dollar of that hour goes
| What you pay a techper clocked hour | $30.00 | ||
| What that hour really costs youper clocked hour | $37.80 | +$7.80payroll taxes, workers' comp, benefits, time off | |
| What a tech costs youper sold hour | $48.46 | +$10.66the clock you pay for and cannot bill | |
| Break-even door rateper sold hour | $94.62 | +$46.16shop overhead | |
| Door rate that hits your profit targetper sold hour | $111.31 | +$16.69the profit you asked for | |
| Rate you have to postper sold hour | $118.80 | +$7.49discount, fleet and warranty hours |
The six steps add up to the figure at the top, to the cent.
What labor has to cover this year
| Technicians for the year, loaded | $151,200.00 | |
| Shop overhead for the year | $144,000.00 | |
| What the parts counter already covers | -$0.00 | |
| What labor has to cover | $295,200.00 |
The year behind that rate
At $105.00 you break even at 3,000.5 sold hours, which is 75.0% of your clock. You say you run at 78.0%.
Diagnostic hours, priced on their own
$0.00
diagnostic rate, per sold hour
Your bays against your clock
Your levers, worth the most first
| $1,000 a month less overhead | -$4.83 an hour |
| One more point of the hours you sell | -$1.51 an hour |
| One more point of what you actually collect | -$1.26 an hour |
This is your own cost arithmetic, not advice and not a market rate. Nothing here says what any other shop charges.
Every figure here is before tax. Some states tax repair labor and this page holds no rate for any of them.
Everything is worked out in your browser. Your wages, your rent and your profit target are not sent anywhere and nothing is saved.
How the shop labor rate calculator works
Start with the hour you pay for. End with the hour you post. Six steps sit between them, and most shops only ever see the first and the last.
The wage
What a tech gets. In the example the calculator opens with, that's $30.00 an hour on the clock. Nothing controversial yet.
The wage, loaded
Employer FICA, unemployment tax, workers' comp, health insurance, paid time off, uniforms, training, the tool allowance. That's your burden, and at 26% it turns $30.00 into $37.80. Put your own number in. We publish no rate for any of those things, and a calculator that hands you one doesn't know your carrier.
The hour you sell, not the hour you pay
This is the step that catches people. A tech is on the clock forty hours and puts thirty-one of them on tickets. You paid for forty. So the loaded hour, spread across the hours you can actually bill, costs $48.46. Same tech, same wage, eleven dollars more.
The overhead
Rent, utilities, insurance, the shop management software, the scan tool subscriptions, the service advisor, your own pay if you take one. Twelve grand a month across 3,120 sold hours is $46.16 an hour, and now you're at $94.62. That's break-even: the rate at which the shop pays for itself and nobody makes anything.
The profit
A margin is a share of what you charge, while a markup multiplies what the work costs you. Fifteen percent of revenue means dividing by 0.85. Multiply by 1.15 instead and you come up short by real money. $94.62 becomes $111.31.
The rate you have to post
Here's the step the other calculators we checked leave out. You don't collect your posted rate on every hour. Fleet accounts and coupons pay less. A third-party warranty administrator pays what it decides to pay, and a comeback pays nothing. On the example mix, ninety-three point seven cents of every posted dollar comes in. So to bank $111.31 you have to post $118.80.
Where the pay plan splits the road
A flat-rate tech is paid per booked hour, so his cost lands on the hour you sell to begin with and this step is free. Take one set of shop numbers and run it both ways: break-even comes out $92.81 on hourly pay and $85.01 on flat rate.
The rate you have to post comes from dividing by 0.937. Add the 6.3% back on top instead and you get $118.32, which leaves you forty-eight cents an hour short: about fifteen hundred dollars a year on this shop, and over seven thousand on a shop with a heavier discount book. Getting that backwards is the most common error in the whole calculation.
Add the column up and it comes to the figure at the top of the card, to the cent. That's on purpose. Every figure here is rounded to the penny and every step is the difference between two rounded steps, so you can check the whole thing on the back of a work order.
Who this is for
You run one shop, or you run it and still turn wrenches in it. One to eight bays. You sign the checks, you know to the dollar what you pay your A-tech, and nobody has ever shown you the arithmetic that joins that wage to the number on your sign.
You're here because something forced the question. A tech asked for a raise. The landlord sent a renewal. The insurance came due. Or the year ended busy and broke and you finally sat down on a slow Tuesday to work out why.
Hourly techs or flat rate, general repair or truck, diesel, body or transmission: the arithmetic is the same one. The first thing this page asks is how you pay people, because that's the part that changes the answer.
Why there is no going rate on this page
Search for a shop labor rate and you get averages. By state, by zip code, by the year. We hold none of that, and the absence is deliberate rather than lazy.
Three reasons, and they all point the same way.
The first is that a copied rate is what got most shops into trouble. The shop down the road set his number against his rent, his pay plan and his mix. It is a perfectly good number for him. Carried across town, it's a guess wearing a decimal point.
The second is that any table we published would be stale. Rates move with wages, insurance and rent, and a page that quotes a range from a survey nobody refreshes is worse than a page that quotes nothing.
The third is the one we take most seriously. Car owners use us to find shops. If we started publishing what shops ought to charge, we would be telling one side of a market what to do with the other side's money. That isn't our business, and we wouldn't want to be read as doing it even by accident.
So we never tell you to charge more. We show you what your own costs require, where each dollar of it goes, and the gap against what you charge today. What you do with that is between you, your customers and your nerve.
Shop owner questions about labor rates
How do I work out my shop's labor rate?
Work backwards from the year, not forwards from the wage. Add what your techs cost you loaded for twelve months to what the shop costs to run for twelve months. Divide that by the hours you'll actually sell, not the hours they're on the clock. That gives you break-even. Add the profit you want as a share of revenue, then gross the result up for the hours that never pay full rate. The calculator at the top of this page does exactly that, and it shows every step.
What is an effective labor rate, and how do I calculate it?
Your effective labor rate is what you actually bank per hour of labor, as against the rate on the wall. Take your labor sales for a month and divide by the labor hours you sold in that month. Watch the denominator, because the trade doesn't agree on it: hours sold, hours worked and hours paid or clocked can produce different numbers. The three pages we checked state three different denominators between them, and one of them states two on its own page. This page divides by hours sold, and labels every figure that way.
Why doesn't this show what other shops charge?
Because it would be the wrong answer to the right question. Somebody else's rate carries their rent, their pay plan and their warranty mix, none of which are yours. Car owners use us to find shops, so we have no business telling shops what to charge. This tool holds no rate data of any kind. Every result is calculated only from the values in the form, which is also why your inputs don't have to leave your browser.
What is the difference between productivity and efficiency?
Productivity is how much of the clock reaches a ticket. Forty hours on the clock, thirty-one of them on a repair order, that's 78%, and the missing time is parts, approvals, clean-up and standing around. Efficiency is how you did against book time once you were working: two hours booked, ninety minutes taken, that's 133%, which is why efficiency can validly exceed 100%. Multiply the two and you get the share of every clocked hour you sell, which is the single number this page asks for. The trade sometimes calls that proficiency. Splitting it in two changes no rate here. What it does tell you is which of the two points is the cheaper one for you to buy.
My techs are on flat rate. Does that change the number?
It changes it a lot, and none of the calculators we checked asks about it. An hourly tech is paid for every hour he stands in your building. A flat-rate tech is paid for the hours he books. Same wage, same shop, one set of numbers run both ways: break-even $85.01 against $92.81, and a posted rate of $113.04 against $123.42. Pick the chip at the top of the form and watch the third rung go to zero.
What goes into labor burden?
Everything you pay because that person works there, over and above the wage itself: employer Social Security and Medicare, federal and state unemployment, the workers' compensation premium, health insurance, paid time off, uniforms and laundry, training, the tool or boot allowance. Here it's one percentage on top of the wage, and you enter your own. We publish no rate for any of it, because your workers' comp classification, your carrier and your state aren't ours to guess. One trap worth naming: if your clocked-hours figure already leaves vacation out, don't count paid time off in the burden percentage as well. One or the other.
How many billable hours should I count on?
Count the number you can defend, not the one that makes the arithmetic comfortable. If you've never measured it, take last month's sold hours off your shop management system and divide by the hours your techs were on the clock. If you can't get that, put your best guess in and then read the lever rows under the result. If one point of it moves your posted rate a dollar and a half, that is the number to go and measure. Not the rate.
Does this work for a body shop?
The arithmetic is the same, and so is the pay-plan question. If your shop has a booth, a frame machine or similar equipment, put their cost and their maintenance in overhead. Put insurer-paid work in the discount-and-fleet row at whatever percentage of your posted rate it actually pays. The last rung will then show the posted rate implied by that mix. Truck, diesel, trailer and RV shops use the same arithmetic.
Does anything I type get saved or sent anywhere?
No. There is no account, no email field and no save button, and no form submits your inputs to a server. The arithmetic runs in your browser and stops there. That matters more here than on most calculators, because what you're typing is your payroll, your rent and what you want to make. Close the tab and it's gone, which is why the print button exists. If you use the share link, remember it carries those numbers in the address bar. Send it to your bookkeeper, not to a group chat.
Where a shop labor rate actually comes from
A door rate is a claim about a year. Weeks are noisy. One transmission job flatters a month, and only across twelve months do rent, payroll burden and the share of the clock that reaches a ticket settle into numbers you can divide by. That's why the calculator takes annual and monthly figures and hands back an hourly one, instead of the other way around.
Two of the six inputs are the ones shops get wrong, and they go wrong in the same direction. The first is burden. The wage is not the cost. The cost is the wage plus every dollar that rides on it, and a rate set against a bare wage is short before it leaves the building. The second is the hour. You pay for clocked hours and you sell book hours, and the gap between them is parts waiting, comebacks, clean-up and the hour a customer never approved. Spread your costs over the hours you paid for and you get a comfortable number that doesn't survive contact with the bank.
Then there's the last step, the one we couldn't find in any other calculator we opened. A posted rate and a realized rate are different numbers, and the difference is whatever you discount. Fleet accounts, coupon jobs, third-party warranty work and comebacks all collect less than the rate on the wall. If you realize ninety-four cents on the posted dollar, the rate you have to post is your required rate divided by 0.94, not the required rate plus six percent. Those two aren't the same arithmetic, and the gap between them adds up over a year of sold hours.
None of this decides what your market will bear. It decides what your own year requires, which is the number you need in your head before you have the conversation about the other one.
Sources and last checked
There's no rate data behind this calculator: no table of what other shops charge, by state or by zip code, so there's no dataset to go stale. Every figure you see is calculated only from the values in the form, in your own browser.
We last checked the searches shop owners actually run, the other free labor rate calculators and every link on this page. That was August 24, 2026. We lay the arithmetic out step by step under How the shop labor rate calculator works, so you can walk it against your own books instead of taking our word for it.
Published by Preferred Mechanic. We won't tell you what to charge, just what your own costs call for.
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