Service Quote Calculator
Quote jobs from your fully-loaded costs — labor, materials, and your overhead’s share — so the price includes profit instead of hoping for it.
Written by Dorothy Ibrahim, 10+ years in banking & finance
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How we calculate this
This calculator prices a job from your fully-loaded costs — labor with burden, materials, and this job’s fair share of your monthly overhead — then applies your target margin so profit is built into the quote instead of hoped for. The number most service businesses never compute is the true cost per billable hour: wage plus overhead spread across the hours you can actually bill. Quote below that rate and the job loses money before the first material is bought.
The formulas
- Overhead per billable hour
- monthly overhead ÷ billable hours per monthOverhead is spread only across hours you can bill, not hours you work — that difference is why the number surprises people.
- True cost per billable hour (fully loaded rate)
- hourly labor cost (wage + burden) + overhead per hour
- Base job cost
- (labor hours × fully loaded rate) + materials at cost
- Quote price
- base job cost ÷ (1 − target margin %)Margin is a share of the quote, so divide — do not multiply cost by (1 + margin), which under-prices.
- Alternative structure with a materials markup
- quote + materials × materials markup %Shown as a separate line item rather than folded into the margin — common in trades.
Worked example
- Say a job takes 20 labor hours at a $35/hour loaded labor cost, uses $800 of materials, your overhead is $8,000/month, you bill 120 hours a month, and you target a 25% margin.
- Overhead per billable hour = $8,000 ÷ 120 = $66.67 — nearly twice the wage itself.
- True cost per billable hour = $35 + $66.67 = $101.67, so the job’s loaded labor is 20 × $101.67 = $2,033.33.
- Base cost = $2,033.33 + $800 = $2,833.33; quote = $2,833.33 ÷ (1 − 0.25) = $3,777.78.
- That breaks down as $700 raw labor + $1,333.33 overhead + $800 materials + $944.44 profit; with the optional 15% materials markup as a separate line, the alternative quote is $3,897.78.
Rates, benchmarks & sources
- Overhead allocation per billable hour and margin-on-price quoting: quote = base cost ÷ (1 − margin) — Standard job-costing method
- A quote’s implied labor rate usually needs 2–2.5× the raw wage to cover burden, overhead, and profit; billable hours above ~160/month per person (~75% utilization) are rarely sustainable — Rule of thumb (spec §2.10)
Figures current as of 2026-07-02. See our methodology & editorial standards for how constants are versioned and verified.
What this tool doesn’t model
- Overhead per hour depends entirely on your billable-hours estimate; overstate the hours you can really bill and every quote silently under-recovers overhead.
- It prices one job at your average cost structure — rush work, travel, difficult site conditions, and rework risk are not modeled and belong in the margin or as explicit line items.
- The hourly labor cost must already include burden (payroll taxes, insurance, benefits); entering bare wage understates cost by a wide margin — the True Cost of an Employee calculator computes the loaded figure.
- The 2–2.5× wage and ~160 billable hours thresholds are rules of thumb, not industry standards — capital-heavy trades and solo consultants sit at different multiples.
Frequently asked questions
Why is my cost per hour so much higher than what I pay in wages?
Because every billable hour has to carry a slice of the overhead that exists whether or not you are on a job — rent, vehicles, insurance, admin time. In the default example, $8,000 of monthly overhead across 120 billable hours adds $66.67 to every hour, turning a $35 wage into a $101.67 true cost. Quoting off the wage alone means the overhead comes out of your profit.
Why divide by (1 − margin) instead of just adding 25% to my cost?
Because margin is a share of the price, not of the cost. Adding 25% to a $2,833.33 cost gives $3,541.67, but the profit on that quote is only 20% of the price — you would miss your target on every job. Dividing by 0.75 gives $3,777.78, where the $944.44 of profit is exactly 25% of the quote. It is the same markup-versus-margin confusion that plagues product pricing.
Should I mark up materials or fold them into the margin?
Both structures appear on real quotes, and the tool shows each. Folding materials into the margined base is simpler and hides the split from the client; a separate materials markup (say 15%, adding $120 on $800 of materials in the example) compensates you for procurement, handling, and warranty risk as its own line. What matters is not doing both by accident — that double-charges — and not doing neither, which makes you an unpaid purchasing agent.
How many billable hours per month should I assume?
Fewer than you think — quoting, travel, admin, and callbacks all eat working hours that cannot be billed to anyone. As a rule of thumb, sustained utilization above about 75% of working hours, roughly 160 billable hours per person per month, is rarely sustainable, and the tool warns above that line. Being honest here matters because inflating billable hours shrinks the overhead-per-hour figure and quietly under-prices every job.
What does the implied labor rate warning mean?
The tool divides the non-materials part of your quote by the job hours to get what you are effectively charging per hour of labor. As a rule of thumb, that figure needs to reach 2–2.5× the raw wage before burden, overhead, and profit are all genuinely covered. An implied rate below 2× the wage usually means the margin target is too thin or the overhead allocation is being squeezed — the quote may win the job and still lose money.
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themoneysheet provides educational estimates, not financial, tax, or legal advice. Figures use published rates and formulas current as of the date shown, but your situation may differ. Consult a qualified professional (CPA, attorney, or licensed advisor) before making financial decisions.