Estimating labor — the real cost

The wage is not the cost

Here's the trap that catches almost every new contractor. They price labor at the wage they pay. But an employee who earns $25 an hour costs you far more than $25 once you add the taxes and insurance you're legally on the hook for.

That gap is called labor burden.

Burden commonly adds 30–50% or more on top of the wage, depending on your trade, your state, and your comp rate. Get your real number from your payroll and insurance statements, then estimate with the burdened rate every time.

Estimating the hours

Labor cost = hours × burdened rate.

To get the hours, use production rates: how much work a crew completes per hour, as in "a framer hangs X linear feet of wall per hour." Start with published rates or supplier guidance, then replace them with your own crew's real numbers as you track jobs. Your history beats any book.