Definition
Labor rate is the price per hour (or per unit) used for labor—either what you pay (base wage), what you cost internally (burdened rate), or what you charge the customer (bill rate). In job costing and estimating, “labor rate” usually means the cost rate (often burdened) applied to hours for a job.
Why It Matters
Using the wrong rate—e.g., billing at wage instead of burdened rate, or using an outdated rate—distorts job cost and bids. Clear definitions (base vs. burdened vs. bill) and consistent use in the system prevent underpricing and improve margin visibility.
Field Example
Carpenter base wage $28/hr; burdened rate $38/hr; bill rate to customer $52/hr. For job cost, the job is charged at $38/hr. For an estimate, labor is estimated at $38/hr. The invoice to the customer might show $52/hr. All three “rates” matter for different reports.
Calculation / Formula (if applicable)
Bill rate often equals burdened rate plus markup: e.g., Bill rate = Burdened rate × (1 + markup %). Multiple rates (regular, OT, double time) may apply; software should support rate tables by role or worker.
Software Application
Support multiple rate types (base, burdened, bill) and multiple rate tiers (e.g., overtime). Allow rates by employee, role, or crew. Use the appropriate rate when posting labor to jobs (cost) and when generating invoices (bill). Report effective labor rate by job.
Tooltip Version
Labor rate is the cost or price per hour for labor; use burdened rate for job cost and estimating so you recover full labor cost.
Related Objects
Related: