A builder is pricing the framing labour for a new house -- 3 carpenters for 10 days at $55/hour each. Before the quote goes out, they need the total labour cost including on-costs and their 20% margin so the job is properly priced.
Construction Labour Cost Calculator
Labour
AU: typical $45–$100/hr + super; US: $25–$80/hr
AU: super (11%) + WC insurance (~3%) = ~14–16%. US: FICA (~7.65%) + WC varies.
Builder's margin on labour: typically 15–25%
AU on-costs: Superannuation (11% SGC) + Workers Compensation insurance (2–8% depending on trade) + Long Service Leave levy (varies by state) + annual leave loading. Total: typically 20–25% on top of base rate.
US on-costs: FICA (Social Security 6.2% + Medicare 1.45%) + Federal/State unemployment (FUTA/SUTA ~3%) + Workers Comp (varies by state/trade, 2–15%). Total: typically 18–30%.
US on-costs: FICA (Social Security 6.2% + Medicare 1.45%) + Federal/State unemployment (FUTA/SUTA ~3%) + Workers Comp (varies by state/trade, 2–15%). Total: typically 18–30%.
Reference: Fair Work — Construction Award Rates
Results are estimates for planning purposes. Verify with current standards and a qualified professional.
1 What this calculator does
Calculates the total billable labour cost for a construction project from the hourly rate, total hours, number of workers, on-cost percentage and contractor margin. Shows the base labour cost, on-cost amount, margin amount and total billable cost with an effective rate per hour and per day.
2 Formula & professional reasoning
Base labour = Hourly rate x Hours x Workers
On-cost amount = Base labour x On-cost%
Subtotal = Base labour + On-cost amount
Margin amount = Subtotal x Margin%
Total cost = Subtotal + Margin amount
Effective rate per hour = Total cost / (Hours x Workers)
Effective day rate = Effective hourly rate x 8
On-costs are the employer's statutory obligations on top of the base wage: superannuation (11.5% AU 2024-25), workers compensation insurance (typically 3-6% depending on trade and state), payroll tax (if applicable) and public liability insurance apportionment. Together these typically add 15-25% to the base wage cost. The contractor margin is applied on top of the on-cost-inclusive subtotal -- this covers overheads (vehicles, tools, office, estimating) and profit.
3 Worked examples
⚠️ Illustrative example only — not clinical or professional instruction.
Basic
3 carpenters for 10 days framing
Given: Rate: $55/hr | Hours: 80 (10 days x 8 hrs) | Workers: 3 | On-costs: 15% | Margin: 20%
Working:
Base: $55 x 80 x 3 = $13,200 | On-costs: $13,200 x 0.15 = $1,980 | Subtotal: $15,180 | Margin: $15,180 x 0.20 = $3,036 | Total: $18,216 | Effective rate: $18,216 / (80 x 3) = $75.90/hr | Day rate: $607.20/day/workerAnswer: Total billable labour: $18,216 | Effective rate: $75.90/hr | $607/day per worker
💡 The client sees $18,216 for carpentry labour. The builder's actual cost is $15,180 -- the $3,036 margin covers overhead and profit. Always confirm whether the hourly rate given to you is the employee wage or the all-up employment cost.
Standard
Single specialist trade -- electrician, higher on-costs
Given: Rate: $75/hr | Hours: 40 | Workers: 1 | On-costs: 22% | Margin: 15%
Working:
Base: $75 x 40 x 1 = $3,000 | On-costs: $3,000 x 0.22 = $660 | Subtotal: $3,660 | Margin: $3,660 x 0.15 = $549 | Total: $4,209 | Effective: $4,209 / 40 = $105.23/hrAnswer: Total billable: $4,209 | Effective rate: $105.23/hr
💡 Electrical trades carry higher workers compensation premiums (typically 4-6% of wages in the electrical industry vs 1-2% for lower-risk trades). This is reflected in the higher on-cost percentage.
Advanced
Multi-trade project -- separate labour cost lines
Given: Concreter: $60/hr x 16hrs x 2 workers = $1,920 base | Framer: $55/hr x 80hrs x 3 = $13,200 base | Plumber: $80/hr x 24hrs x 1 = $1,920 base | All at 18% on-costs and 20% margin
Working:
Concreter: $1,920 x 1.18 x 1.20 = $2,717 | Framer: $13,200 x 1.18 x 1.20 = $18,691 | Plumber: $1,920 x 1.18 x 1.20 = $2,717 | Total: $24,125Answer: Total billable labour across 3 trades: $24,125
💡 Calculate each trade separately as on-cost rates differ by trade (workers comp premiums vary). In a detailed construction quote, labour costs are broken down by trade for client transparency and for subcontractor payment management.
4 Sanity check
AU on-cost components (2024-25 approximate)
Superannuation: 11.5% | Workers compensation: 2-8% (trade-dependent) | Payroll tax: 4.85% (VIC) if over threshold | Total typical on-costs: 15-25%
Workers comp rates are set by state insurers and vary by trade risk classification.
Typical contractor margins in construction
Head contractor margin: 10-25% on subcontractor costs | Subcontractor margin on labour: 15-30%
Margins vary by project size, complexity and market conditions. Smaller jobs carry higher margins per $ to cover fixed costs.
Difference between wage rate and billable rate
A tradesperson paid $55/hr wage costs the employer $63-$69/hr all-up (after super and workers comp) | A subcontractor charging $90-$110/hr includes their own on-costs and margin
GST on labour
Add 10% GST to the total billable rate for all taxable supplies to GST-registered clients
5 Common errors
| Error | Cause | Consequence | Fix |
|---|---|---|---|
| Using the employee wage as the on-cost base without adding superannuation | Treating the wage as the full employment cost | On-costs understated by 11.5% (superannuation) at minimum -- job underpriced | The base for on-cost calculation is the gross wage. Superannuation (11.5% in 2024-25) is payable on top of the wage for all employees and must be included in on-costs. The base labour cost in the calculator is the wage before on-costs. |
| Applying the same on-cost rate to all trades regardless of workers comp classification | Using a flat 15% on-cost rate for all trades | Higher-risk trades (scaffolders, roofers, concreters) are underpriced; lower-risk trades are overpriced | Workers compensation premiums vary significantly by trade: clerical staff 0.2%, carpenters 2-4%, plumbers and electricians 4-6%, roofers 8-12%, concreters 5-8% in most states. Use the actual premium for each trade when calculating on-costs. |
| Forgetting to add GST to the final billable rate when invoicing | Treating the calculated total as the invoice total | Collecting less than legally required for GST -- ATO liability for unremitted GST | If you are GST-registered, add 10% GST to the total billable labour cost. The GST-inclusive amount is what you invoice to the client. The GST component is collected on behalf of the ATO. |
| Not tracking actual hours against estimated hours during the job | Estimating hours at quoting and not measuring actuals during construction | Labour overruns not identified until after practical completion -- no opportunity to recoup cost through variations | Use a simple daily timesheet for every worker on every trade. Compare cumulative actual hours to estimated hours weekly. If running over on a fixed-price contract, issue a variation notice as soon as the overrun is identified -- not at the end of the job. |
6 Reference & regulatory links
🇦🇺 Australia
7 Professional workflow
Common tools used alongside this one:
Build Cost Estimator
Build Cost Estimator gives the total project cost benchmark -- labour cost should typically represent 35-45% of the total build cost
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Construction Permit Cost Estimator
Construction Permit Cost Estimator adds the council fees not captured in labour or material costs
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Renovation Budget Estimator
Renovation Budget Estimator provides the total renovation budget against which individual labour cost lines are benchmarked
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