What an hour of labour really costs

It is the most-used and least-verified number in the trade. A lot of contractors bill an hourly rate inherited from an old boss and nudged upward every couple of years. Here is how to rebuild it from your own figures.

Wage is not cost

An employee paid $28 an hour does not cost $28 an hour. On top of the wage, depending on your situation and your province:

• employer contributions;
• insurance and workers' compensation coverage;
• paid time off and statutory holidays, which are paid but not billable;
• equipment, clothing, tools, phone.

Across trades, true cost commonly runs 25 to 45% above gross wage. The exact percentage is yours, and it is worked out with your accountant — but the gap is always there.

Non-billable hours are half the problem

This is the blind spot. A 40-hour week almost never contains 40 billable hours:

• travel between sites;
• runs to the supplier;
• loading and unloading;
• estimate visits that go nowhere;
• equipment maintenance, paperwork, phone calls.

If 30 hours out of 40 are billable, the entire cost of the week has to be recovered over those 30 hours. That ratio, more than the wage, sets the rate you need to charge.

The method, in three lines

1. Real annual cost of a person: wage, contributions, insurance, equipment.
2. Real billable hours in a year: hours worked, minus everything that does not get billed.
3. Hourly cost = 1 ÷ 2. Your selling rate then sits above that, with your margin and your share of overhead.

Do the exercise honestly once. The result is almost always a surprise, and it surprises in the same direction.

What the gap teaches you afterwards

The calculation above is a forecast. The only way to know whether it holds is to compare, job by job, what you planned against what you actually spent.

One gap means nothing: a difficult site, a surprise under a slab. A gap that keeps coming back is information: your prices are too low, or your billable hours are overstated.

How Devik uses it

Your price library carries a cost and a price per item, so planned margin already exists, calculated, line by line. What was missing was the real one.

You enter expenses as you go — materials, labour as hours × rate or as a flat amount, subcontracting — with a photo of the receipt taken at the counter. Devik shows three numbers rather than a dashboard: planned cost, real cost, and the gap in margin points.

When the gap repeatedly exceeds a threshold on materials or labour, the tool prompts you to revisit those prices — with your numbers, not a market average.

An employee can enter an expense without ever seeing your margin. That is the delicate part of the feature, and it is settled that way.