How to calculate labor cost
Start with crew hours: number of workers x hours each. Multiply by the hourly wage to get direct wages. Two people for 8 hours at $25 is 16 crew hours and $400 in wages.
Then add labor burden, the cost of employing someone on top of their wage. That covers payroll taxes, workers comp, unemployment insurance, and any benefits or paid time off. Burden on trades crews often runs 20% to 40% of wages. At 30%, that $400 in wages really costs you $520.
How to estimate labor for a construction job
Break the job into tasks and estimate hours per task based on jobs you have already done. Tear-out, prep, install, cleanup and the drive all count. If you do not track it, you will keep guessing low.
Add a buffer for the unknowns: access problems, material runs, weather and callbacks. Ten to fifteen percent extra hours on unfamiliar work is common sense, not padding.
Turning labor cost into a price
Labor cost is what you pay, not what you charge. Add your markup to cover overhead and profit. On the example above, a 50% markup turns $520 of labor into $780 billed, which works out to $48.75 per crew hour.
If that per-hour number looks low next to what the trucks, insurance and office cost to run, your markup is too thin. Pair this with the hourly rate calculator to find your real floor.
Keep labor honest on every quote
QuotesForge lets you save labor as reusable line items with your burden and markup baked in, so every estimate prices labor the same way, and the job record shows what you quoted against what it took.