Effective labor rate calculator for repair shops
Enter your labor sales and the hours you billed to see what you really collect per hour, how far that is below your posted rate, and what a few dollars more per hour is worth over a year.
Use labor sales and hours from the same report and period. Leave out parts, sublet and fees.
Effective labor rate (ELR) is labor sales divided by the labor hours you billed in the same period. Sell $46,200 of labor across 360 billed hours and your ELR is $128.33, or 91.7% of a $140 posted rate. Dividing labor sales by the hours techs were paid for gives a stricter number that also counts unbilled time.
How to use the Effective Labor Rate Calculator
Enter labor sales and hours
Labor sales (no parts, sublet or fees) and the labor hours billed on those repair orders, for one week, month or year.
Add your posted rate
Your door rate shows how much you give away per billed hour. Paid tech hours are optional.
Try a what-if
Type the ELR you're aiming for to see the extra labor dollars in that period and over a year.
What the effective labor rate calculator works out
ELR and % of posted rate
Labor sales ÷ billed hours, and that rate as a share of your posted rate.
The gap in dollars
What you'd have collected at your posted rate on the same billed hours.
Per paid hour
Labor sales ÷ paid tech hours, the stricter view that also counts unbilled time.
Billed vs paid hours
Billed hours as a share of paid hours, so you can see whether rate or time is the bigger leak.
Week, month or year
The what-if is scaled to a year from whichever period your numbers cover.
- Formula
- ELR = labor sales ÷ labor hours billed, in the same period
- Stricter version
- Labor sales ÷ hours paid to technicians (some coaches call this ELR too)
- Leave out
- Parts, sublet, fees and sales tax
- Cost and privacy
- Free, no sign-up; runs in your browser and nothing is uploaded
Questions about the effective labor rate calculator
How do you calculate effective labor rate?
Why is my effective labor rate lower than my posted rate?
Should I divide by billed hours or paid hours?
Is ELR the same as labor gross profit?
What should I include in labor sales?
Where the formulas and rules come from
- Ratchet+Wrench: Understanding your effective labor rate
- FenderBender: Why are you effectively giving your labor away?
Checked October 2026. Results are estimates; check them against your own records before you rely on them.
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