What counts as labor cost?

Direct payroll, support payroll, payroll taxes, benefits, commissions, and outside labor can all count.

Is a lower labor percentage always better?

Not always. A very low number can also mean the business is understaffed or the service model is different.

Should owners include their own pay?

If owner pay is part of the normal labor model, it is usually better to include it.

Labor Cost Percentage Calculator

See what share of revenue is going to payroll and contractors, and whether that share looks heavy for your type of business.

IndustryUse this if none of the listed industries fit, or if you want a broad planning check first.Monthly revenueTop-line revenue for the month.Direct delivery payrollPayroll for the people doing the work tied to sales.Support and admin payrollPayroll for managers, admin, or support roles.Payroll taxes and benefitsEmployer taxes, pension, benefits, or other labor add-ons.Outside labor costContractors, freelancers, commissions, or temp labor tied to the month.Total labor hours this monthThe total team hours worked across direct and support roles.

Result

Total labor cost

$20,400

Labor cost percentage

39.2%

Revenue after labor

$31,600

Revenue per labor hour

$63

Labor cost per hour

$25

Planning guide

Compare your labor cost percentage to the planning range we use for general small business.

Benchmark range: 20% to 40%Your result: 39.2%

This is a broad planning range for the share of revenue spent on payroll, taxes, and contractor labor.

Source: Daykeeper planning guide (Used in this calculator)

What this means

Labor cost looks workable

Your labor share is not above the range we use for general small business

You are spending about 39.2% of revenue on labor. That leaves about $31,600 before rent, software, debt, and other overhead.

You are making about $63 per labor hour. If labor is too high, the fix is usually better pricing, tighter scheduling, better team use, or stronger sales volume, not just cutting hours blindly.

Planning guide

Planning labor-cost ranges used in this calculator

This calculator compares your labor cost percentage with a planning range for each industry.

It also splits labor into direct payroll, support payroll, taxes, and outside labor so the result is closer to how real teams are staffed.

IndustryUse this if none of the listed industries fit, or if you want a broad planning check first.

General small business

Use this if none of the listed industries fit, or if you want a broad planning check first.

Benchmark range: 20% to 40%

This is a broad planning range for the share of revenue spent on payroll, taxes, and contractor labor.

Source: Daykeeper planning guide (Used in this calculator)

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Calculator guide

How to use this labor cost calculator

This calculator shows what share of revenue is being used by direct payroll, support payroll, payroll taxes, and outside labor.

Why labor cost matters

Labor is often the biggest controllable cost in a small business.

If labor rises faster than revenue, the business can feel busy while profit still stays weak.

How to use the result

A high labor share does not always mean you should cut hours. It may mean pricing is weak, team use is poor, or sales are too soft.

Use the number as a signal, not a blunt rule.