Most owners I've met price their work off the wage. They pay a tech $25 an hour, charge the customer some multiple of that, and assume the gap is profit. Then they wonder why they're busy all year and broke at the end of it.
The gap isn't profit. Most of it is cost you forgot to count. That's what burden rate fixes. Get this one number right and everything downstream — your quota, your labor pricing, your commission split — finally sits on solid ground. Get it wrong and you're guessing with every quote.
What goes in it
Burden rate is the fully-loaded cost of one lead tech and his truck, for one hour. The wage is line one. Everything else stacks on top — for the whole year:
- Wages and payroll taxes — the paycheck, your half of FICA, unemployment.
- Workers' comp and insurance — liability, business, all of it. In the trades this is real money.
- Benefits — health, 401k match, PTO.
- The truck — payment, fuel, maintenance, insurance.
- Tools, phone, tablet, software, uniforms — every recurring cost it takes to keep a tech working.
- The office — rent, admin, advertising, the CRM.
- Your own pay — a reasonable salary for the owner. Not a lifestyle. Reasonable.
- Your net profit target — built in on purpose, so the company is covered before a dollar of commission is paid.
What stays out: material cost, subcontractors, and credit card fees. Material bills on its own line. Subs bill on their own line. Card fees come off the sale. A cost goes in the rate or on its own line — never both.
The worked example
One van. One lead tech at $30 an hour. One year. Your numbers will differ — this is the shape of the math, not a quote.
That's $640 a day — what that truck has to bring back every day it rolls, whether the tech sells anything or not. The "$30 guy" is an $80 hour.
Why 250 days and 8 hours
Fifty-two weeks is 260 weekdays. Take out holidays, PTO, weather, and the days a truck is down, and 250 producing days is an honest standard year. In the portal, Step 1 builds your own year from your actual schedule. Eight hours is the day you're building a business on — not the hero day.
Two vans? $320,000 ÷ 4,000 hours — still $80. And you count lead techs with a dispatchable truck — not heads. A helper riding along doesn't add a truck to the schedule. His wage goes into that truck's daily cost. The unit of capacity is the van.
Divide by sellable hours — not billable hours
Sellable hours are paid hours minus time off and company time. On a standard year that's 2,000 per lead tech. You divide by all 2,000.
Burden rate is cost per paid hour. Sold or not doesn't change what the hour cost you.
But not every paid hour gets sold. Every Property Visit, parts runs, callbacks, a hole in the schedule — all paid, none bought. Those are unsold hours. They don't go in the rate. They go in the price, added once to every labor package, never once per tech.
Your tech bids the whole job on the property — arrival through close-out. That's job time, and it's the slot. The drive, parts runs and other unsold hours ride on top, so he never has to think about them.
Divide by a "billable ratio" and add unsold hours to your packages, and you've billed the customer for the same unsold time two times. You'll price yourself out of work you should have won. One place. Never both.
Burden rate is your floor, not your price
Burden rate is the company floor — every dollar you spend plus the profit you built in. Your price still has to clear two more lines:
- The tech floor — what a package has to sell for a good tech to earn a career number at forty hours a week. Price between the floors and the company looks fine, right up until your best tech gives notice.
- Your market — what your area and your customers can bear. The math tells you the floor. The market tells you the ceiling. How you run — phone answered, on time, clean truck, work done right — decides how close you get.
Price below the floor and volume just makes you lose money faster. Know the floor and every other decision — what to charge, what quota to set, what you can afford to pay — gets honest.
What to do with the number
Once your burden rate is real, it drives the rest of the system. It sets every flat-rate labor package floor. It sets the quota — burden rate × the hours a crew actually worked in the period. And everything the crew sells above that quota is the pool for a commission split that pays your best people more without bleeding the company. One true number, and the guesswork is gone.
Common questions
Is burden rate the same as the price I charge?
No. Burden rate is the company floor — cost plus the profit you built in. Price has to clear the tech floor above it, and your market decides how far above both you can go.
Why is it so much higher than the wage?
Because the wage is one line out of many. The truck, insurance, benefits, the office, and your profit all get carried by the same hours the tech is on payroll.
Should my own pay go in it?
Yes — a reasonable salary for the work you do. Not the boat, not your personal vehicle. Your techs shouldn't be clearing quota to pay for your lifestyle.
What if my techs don't sell all 40 hours a week?
Nobody does. Your burden rate still divides by every paid hour. The time nobody buys — Property Visits, parts runs, callbacks, schedule gaps — gets priced into your labor packages as unsold hours, once per job. So you only charge for it once.
How often should I recalculate it?
At least once a year, and any time insurance, fuel, wages, or your number of trucks moves. Burden rate isn't set-and-forget — it drifts with your real costs.
Run your real number
Plug in your real expenses, your profit target, and your lead techs and get your burden rate in minutes — then build the packages, quota, and commission split on top of it.
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