COSTING AND PROFITABILITY

How to Calculate Your True Hourly Cost (Without Guesswork)

A full order book does not guarantee a healthy margin. Enter costs and productive hours for one person or one capacity unit to estimate what each productive hour costs. For a larger team, aggregate the hours on the same basis as the costs.

True Hourly Cost Calculator

Adjust the sliders to match your monthly costs, weekly hours and productive time. Then enter your current hourly rate to compare it with your estimated cost.

14.000 €
40 h
65 %

Allow for meetings, administration, breaks and other non-productive time. The preset is an example; use your own data.

Productive Hours per Month:

112 h

Estimated Hourly Cost:

125.00 €/h

Illustrative Rate with a 15% Markup:

143.75 €/h

How the Calculation Works

This simple calculator divides monthly costs by estimated productive hours for one person or capacity unit. If the monthly cost covers several people, combine their productive hours before using the result to set prices. Check all inputs against actual records.

1Total Costs

Include payroll and employer costs (including your own), rent, utilities, software, insurance, vehicles and other recurring overheads. Use the same period for every figure.

2Productive Hours

Scheduled hours are not all available for productive work. Subtract meetings, administration, travel and downtime. Measure your own utilisation rather than assuming the example percentage applies to you.

3The Markup

Dividing cost by productive hours estimates a break-even hourly cost. The calculator applies a 15% markup to that cost as an example. A 15% markup is not the same as a 15% profit margin, and your actual target depends on your business.

Related Template: Line and Machine Costing

Use the line and machine costing template when you need a more detailed view of production costs, resource by resource.

FREE TEMPLATE

Hourly Cost Calculator (Excel + Guide)

The template includes a Spanish and English spreadsheet and guide. Its product page is currently in Spanish.

Get the free template (Spanish page)

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The template I use for this

Apply this article's calculation to each line and product reference: effective hours, real hourly cost and margin per part with a traffic light. That is the e2b Line & Machine Costing template, with a pre-filled factory example and a PDF guide in English and Spanish.

See the line costing template

Summary and Next Steps

Common Mistakes to Avoid

  • Forgetting less visible costs such as software, insurance and accounting.
  • Using all scheduled hours instead of productive hours.
  • Applying the same hourly cost to every role or service.

Metrics That Matter

  • Estimated hourly cost (€) by role or service type.
  • Break-even revenue (€/month): How much you need to bill to cover costs.
  • Actual monthly margin vs target: A check on your profitability.

Illustrative example

Suppose a small manufacturer uses this calculator to estimate its hourly cost. Without layoffs or new machinery, it may spot unproductive time and test changes that could lower its break-even point. This is an example, not a measured client result.

Your Action Plan

  • Today: List your monthly fixed and variable costs. Check that nothing material is missing.
  • Within 7 days: Build a simple spreadsheet from your own records to estimate an hourly cost.
  • Within 30 days: Review the rates of your next three jobs or services against the new estimate. Do they cover the costs?