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Fully Burdened Labor Rate Formula:
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The Fully Burdened Labor Rate represents the total cost of an employee including base wage plus all associated overhead costs (benefits, taxes, insurance, etc.). It provides a complete picture of labor costs for budgeting and pricing purposes.
The calculator uses the fully burdened labor rate formula:
Where:
Explanation: The burden percentage accounts for all additional costs beyond the base wage that an employer incurs for each hour of labor.
Details: Understanding the fully burdened rate is essential for accurate project costing, budgeting, and pricing decisions. It ensures all labor-related costs are accounted for in financial planning.
Tips: Enter the base wage rate in dollars per hour and the burden percentage (typically 30-50% but can vary by industry and location). Both values must be positive numbers.
Q1: What costs are included in burden percentage?
A: Typical burden costs include payroll taxes, benefits (health insurance, retirement), workers' compensation, training, and other overhead expenses.
Q2: How does burden percentage vary?
A: Burden rates vary by industry, location, and company benefits package. Government contractors often have higher burden rates due to compliance costs.
Q3: Why is this calculation important?
A: Using only base wage for pricing can lead to significant underestimation of true labor costs and potential financial losses.
Q4: How often should burden rates be updated?
A: Burden rates should be reviewed annually or whenever there are significant changes to benefits, taxes, or insurance costs.
Q5: Are there industry standards for burden rates?
A: While no universal standards exist, industry associations often publish typical ranges. Manufacturing typically has higher burden rates than service industries.