Shop Cost Calculator
Calculate Your Hourly Shop Costs
We designed this Shop Cost Calculator to help small shop owners estimate a figure to bid out jobs or justify equipment purchases. We know from experience that different businesses have unique financial characteristics. So please remember that this worksheet’s final figure is an estimate and may not be precise. Need help? Contact us for advice on how to use this tool to your advantage!
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Step #1: Direct Labor
Employees that work 'hands on' to produce the product. List the hourly wages you're paying them.
Employees:Total number of Direct Labor employees 0
Average hourly wage for Direct Labor Employees (1B)
Step #2: Shop Overhead
Indirect Labor -
Employees that are indirectly involved with production. Add the cost of the following positions per month:
Divided by Direct Labor employees 0
Monthly Indirect Labor per each Direct Labor Employee (2B)
Shop Expenses - Monthly -
Divided by Direct Labor employees
Monthly Shop Expenses per each Direct Labor Employee (2D)
Monthly Indirect Labor per each Direct Labor Employee (2B)
Total Shop Overhead per each Direct Labor Employee (2E)
Step # 3 Administrative Overhead
Administrative Labor - Monthly Salaries
Divided by Direct Labor employees 0
Monthly Admin Salaries per each Direct Labor Employee (3B)
Office Expenses - Monthly
Divided by Direct Labor employees 0
Monthly Office Expense per each Direct Labor Employee (3D)
Total Monthly Administrative Salaries & Office Expenses (3C)
Total Monthly Admin. Overhead per each Direct Labor Employee (3E)
Now that we've calculated all of the individual overhead cost, all that's left is to breakdown to hourly rates and add them all together.
Total Monthly Admin. Overhead per each Direct Labor Employee (3E)
Total Monthly Overhead per each Direct Labor Employee
Now we need to break the Monthly Overhead down to an hourly wage rate.
To do this we divide Total Monthly Overhead per each Direct Labor Employee by an average hours worked each month. (2,080 hours divided by 12) 173.33
Average hourly Overhead per each Direct Labor Employee
Average hourly wage per each Direct Labor Employee (1B)
Total Average hourly wage per each Direct Labor Employee
Now that we have determined the average hourly wage that the employees are paid, we need to add the other costs associated with them such as social security, medicare, unemployment insurance, workman's compensation, and any other benefits you may offer.
In most cases it's safe to estimate these costs will add 20% to the hourly rate for benefits.