Free labor cost calculator
Know your real labor cost
Enter one typical week. See your labor cost percentage, your industry benchmark, and where the money leaks. Free, no signup.
Your labor cost
Run the numbers to see your labor cost percentage, your industry benchmark, and where the money leaks.
- Weekly labor cost
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- Annual labor cost
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- Overtime premium
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What you'll find here
Know the cost before you post it.
Homebase totals labor as you build the schedule and flags overtime before it is worked.
Try Homebase freeThe short answer
What is labor cost percentage?
Labor cost percentage is the share of your revenue that goes to paying people. You get it by dividing total labor cost — wages, overtime, payroll taxes, and benefits — by revenue for the same period, then multiplying by 100.
The period has to match on both sides. A week of labor against a month of revenue is the most common way this number comes out wrong.
What counts as “total labor cost”
The numerator is not your payroll run. It is wages plus labor burden — everything you pay on top of a wage to employ someone: payroll taxes (FICA, FUTA, SUI), workers’ compensation, insurance, benefits and paid time off. This calculator applies a 20% burden, so a $20-an-hour employee costs about $24.00 an hour once it is on. Most operators land between 15% and 30%, depending on their state’s unemployment rate, workers’ comp class and benefits package.
It also means every one of your people. Direct labor — the cook on the line, the stylist in the chair — and indirect labor — managers, prep, cleaning, admin — both count, because both are money leaving the business against the same revenue.
Worked example
How to calculate labor cost, step by step
Four steps, on a business doing $32,000 a week with 420 scheduled hours at $18.50 an hour.
- 1
Add up base wages
Scheduled hours × average hourly wage.
420 × $18.50 = $7,770
- 2
Add the overtime premium
Overtime is time-and-a-half, and the base hour is already counted in step 1 — so you only add the extra half.
22 × $18.50 × 0.5 = $203.50 → wages so far $7,973.50
- 3
Gross up to true employer cost
Wages aren't what an employee costs you. Payroll taxes (FICA, FUTA, SUI), workers' comp, and benefits add roughly 20% on top. This is the step most calculators skip, and skipping it makes your labor cost look better than it is.
$7,973.50 × 1.2 = $9,568
- 4
Divide by revenue
Same period on both sides, then multiply by 100.
$9,568 ÷ $32,000 × 100 = 29.9%
Whether 29.9% is good depends entirely on what you run. A full-service restaurant at that number is doing fine; a grocery store is in trouble. That’s what the table below is for.
Homebase totals labor as you build the schedule and flags overtime before it is worked.
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What is a good labor cost percentage?
A good labor cost percentage is one that sits inside the typical range for your industry — there is no single number that works across all of them. Quick service restaurants run lean at 25–31%; full service sits at 34–38%; grocery runs far lower because revenue per employee is much higher. Find your row.
| Industry | Typical labor cost | Median | Typical hourly wage |
|---|---|---|---|
| Full service restaurant | 34–38% | 36.5% | $11–$26 |
| Quick service restaurant | 25–31% | 29% | $11–$19 |
| Fast casual | 28–33% | 31% | $12–$22 |
| Coffee shop / café | 28–35% | 31.5% | $11–$19 |
| Fine dining | 35–40% | 37.5% | $15–$42 |
| Bar / brewery | 18–24% | 21% | $10–$35 |
| Retail (general) | 10–20% | 15% | $12–$23 |
| Grocery / convenience | 9–14% | 11.5% | $12–$24 |
| Salon / spa / barbershop | 40–50% | 45% | $12–$34 |
| Fitness studio / gym | 38–42% | 41.7% | $13–$39 |
| Dental / small clinic | 25–30% | 27.5% | $17–$58 |
| Boutique hotel / B&B | 30–35% | 32.4% | $13–$23 |
| Franchise (general) | 25–35% | 30% | $12–$23 |
| Cleaning service | 40–55% | 47% | $13–$24 |
| Auto repair / detailing | 20–30% | 25% | $16–$39 |
Ranges are total labor cost — wages plus payroll taxes and benefits — so they line up with what the calculator reports. Wage ranges are BLS OEWS (May 2024) for each industry’s dominant occupations, roughly 10th to 90th percentile. Labor percentages come from the National Restaurant Association, Toast, NRF, FMI, AHLA, ADA, and the Health & Fitness Association. Medians are industry-wide; individual operators vary.
The playbook
How to lower your labor cost percentage
You lower your labor cost percentage by moving hours, not by cutting people: staff to the hours that actually make money, clear overtime before payroll locks, close the gaps where two shifts overlap, and look at the number weekly instead of at month end. Every one of those is a scheduling decision, which is why the same operators keep finding room without touching pay or headcount.
The first two are the ones with real money in them: forecasting labor against demand is how you stop paying for hours that no revenue arrives during, and tracking overtime as it accrues is how you catch a premium hour before it is already worked.
- 1
Staff to your sales curve, not last week's template
Pull hourly sales for the last four weeks and lay your staffed hours over it. Copying last week forward is what quietly locks in a slow Tuesday afternoon that hasn't been busy in a year. This is usually the biggest single lever and the one that costs nothing to pull.
- 2
Clear overtime before payroll locks, not after
An overtime hour costs 1.5×, so the extra half is pure premium — and it's fully avoidable by moving the hour to someone still under 40. Once the pay period closes you own it. Mid-week is when this is still a scheduling problem.
- 3
Stagger your shift handoffs
When two shifts overlap by 15 to 30 minutes, you pay two people for the same coverage. Cut the earlier shift 15 minutes short and start the later one 15 minutes earlier: same coverage, no double-paid window. Repeat it across a week of handoffs and it adds up faster than it sounds.
- 4
Cross-train before you hire
When revenue per employee is already close to what each employee costs, adding headcount makes the percentage worse, not better. Training two or three people to cover a second station lifts output per person instead, and it gives you coverage options the next time someone calls out.
- 5
Check the percentage weekly, not monthly
A monthly number tells you what happened. A weekly number is still something you can schedule against. Operators who watch it every week catch drift while it's a few hours, which is the difference between an adjustment and a cut.
Customer story: how Butter Baker saved 20% of its labor budget
Customer story
We save time, and we save labor costs. I’d say we saved about 20% of our labor budget because of how much more efficient [Homebase] made things.
20%
of Butter Baker’s labor budget saved after moving scheduling, time tracking and team communication onto Homebase.
Read the Butter Baker storyFAQ
Questions operators actually ask.
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