Business Costing

Labor Cost Calculator

Enter your wage, hours (including any overtime), and how many units this shift produced — see your real labor cost per unit, accounting for overtime pay, not just wage × hours. Live, on the same shared formula engine as every other calculator here.

Example data

Shift & Wage

Tell us about the shift you're costing out.

Sales (optional)

Know your total sales for this same period? Enter it to see labor cost as a % of sales.

Labor Cost Per Unit
$0.00
This is what labor adds to the cost of each unit.
Total Labor Cost
$0.00
The whole shift, regular pay plus overtime.
Regular pay$0.00
Overtime pay$0.00
Total labor cost$0.00
Labor cost % of sales—

Want the full picture? Try the Ultimate Calculator — combines this with packaging, labor, fees, and overhead in one session.

How this is calculated ▸
Total labor cost = (wage × regular hours) + (wage × OT multiplier × overtime hours). Labor cost per unit = total labor cost ÷ units produced. Formula engine version .

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Formula engine v Last reviewed: July 27, 2026 · Reviewed by the team behind Mama's Cheesecake & Pretzels, an operating food truck.

How to use the result

Labor cost per unit is what labor adds to the cost of each dish or portion — combine it with your ingredient cost per unit (from the Recipe Cost Calculator or Cost Per Serving Calculator) to get your true, fully-loaded cost per unit — the number that should actually go into the Target Menu Price Calculator if you want a price that protects margin after labor, not just after ingredients. If you entered sales for this period, labor cost % of sales is the other common way operators track labor — add it to your food cost % (from the Food Cost % Calculator) and you get what the industry calls "prime cost," the single most-watched combined KPI in food service.

How this calculator works

The shortcut most simple labor calculators use is wage × total hours. That's only correct if no overtime was worked. The moment any hours cross into overtime, that shortcut understates true labor cost, because overtime hours don't pay at the base wage — they pay at a premium (1.5× under federal law for most hourly workers, "time-and-a-half," though some states and specific policies set it higher for certain situations). This calculator splits your hours into regular and overtime buckets, pays each at its correct rate, and adds them together for a total that reflects what you actually paid — then divides that by units produced to spread the real cost across everything that shift made.

Worked example

The example loaded above: a Saturday morning prep shift, $18/hour, 35 regular hours plus 10 hours of overtime at 1.5×, producing 220 units, against $3,200 in sales for the period.

  • Regular pay: $18 × 35 = $630.00
  • Overtime pay: $18 × 1.5 × 10 = $270.00
  • Total labor cost: $630.00 + $270.00 = $900.00
  • Labor cost per unit: $900.00 ÷ 220 = $4.09
  • Labor cost % of sales: $900.00 ÷ $3,200.00 × 100 = 28.1%

Notice overtime is 30% of this shift's total labor cost despite being under a quarter of the hours worked (10 of 45) — overtime hours cost 1.5× as much per hour, so they contribute a disproportionate share of total cost. If this operator had used the wage × total-hours shortcut ($18 × 45 = $810), they'd have understated labor cost by $90 for this shift alone — a gap that compounds fast across a full week or month of scheduling with regular overtime.

Common mistakes

  • Using wage × total hours when overtime was worked. As the worked example shows, this understates true labor cost the moment any overtime is on the schedule.
  • Assuming 1.5× overtime always applies. Some states and specific circumstances require double-time or different thresholds — check what actually applies to you rather than assuming the federal default.
  • Treating salaried staff the same as hourly. This calculator is built around an hourly wage and tracked hours — a salaried employee's cost per unit needs a different approach (their pay divided across the units they contributed to, without an hourly rate or overtime math).
  • Forgetting to update "units produced" when staffing changes. The same shift with one more or one fewer person working produces a different unit count — recheck this number rather than reusing an old one.
  • Comparing your labor cost % to a generic "ideal" number. Like food cost %, a healthy labor cost % varies by business type — we only publish a comparative range once it's sourced for a specific niche. See Methodology & Sources for what's documented so far.

Frequently asked questions

Is overtime always 1.5× the base wage? ▸
1.5× ("time-and-a-half") is the standard federal threshold for most hourly workers in the U.S. after 40 hours in a week, but some states set stricter rules (including daily-overtime or double-time rules in certain situations). Enter whatever multiplier actually applies to your business.
What if I don't have any overtime this shift? ▸
Leave overtime hours at 0 — the calculator still works, and total labor cost becomes simply wage × regular hours.
Where does "units produced" come from? ▸
Whatever this shift actually made — batches from the Recipe Cost Calculator, servings from the Cost Per Serving Calculator, or just a count you track directly. It's whatever number lets you fairly spread this shift's labor cost across its output.
How do I combine this with food cost % for "prime cost"? ▸
Prime cost is food cost % plus labor cost %, added together — it's the single biggest combined KPI most food businesses track, since food and labor together are usually the largest controllable costs. Calculate each separately (this calculator for labor, the Food Cost % Calculator for food) and add the two percentages.
Does this handle salaried employees? ▸
Not directly — this calculator is built around an hourly wage with regular and overtime hours. For a salaried employee, divide their pay for the period by the units produced during that same period instead.