Rex says
Money math without the spreadsheet headache. Plug in your numbers and I'll show you exactly where the dollars land.
Try a scenario
Click to load — tweak from there.Inputs
Result
Effective labor rate
$109.68
Gap vs door rate
24.4%
Labor gross margin
65.4%
Revenue left on table per month
$21,900
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How to use this
- 1Enter monthly labor revenue ($).
- 2Enter total hours billed to customers (hrs).
- 3Enter posted door rate ($/hr).
- 4Enter fully-loaded tech cost per hour ($/hr).
- 5Read your effective labor rate on the right — it updates as you type.
- 6Hit Share to keep the scenario or send it to someone.
About this calculator
Your posted door rate and your effective labor rate are almost never the same number. ELR is total labor revenue divided by total hours actually billed to customers, after discounts, comebacks, warranty write-downs, and menu pricing that undercuts the flat-rate hour. Shops that never track ELR routinely bleed 15-25% of labor revenue without noticing because the shop rate on the wall looks fine while flat-rate jobs get sold under book time or discounted at the counter. This tool takes your monthly labor sales and the hours you actually billed customers for, and backs into the real number you're collecting per hour. Compare that to your posted door rate to see the gap, and compare it to your fully-loaded technician cost per hour to see your true labor gross margin. A healthy independent shop should see ELR within 10% of door rate and a labor gross margin north of 65%. If ELR is running 20%+ below door rate, the leak is usually in service advisor discounting, warranty comebacks eating hours, or menu-priced maintenance items priced below the labor guide.
Worked example
Using the values the calculator loads with:
Inputs
- Monthly labor revenue: 68000 $
- Total hours billed to customers: 620 hrs
- Posted door rate: 145 $/hr
- Fully-loaded tech cost per hour: 38 $/hr
Results
- Effective labor rate: $109.68
- Gap vs door rate: 24.4%
- Labor gross margin: 65.4%
- Revenue left on table per month: $21,900
What each field means
Inputs
- Monthly labor revenue ($)
- The monthly labor revenue used in the calculation, measured in $. Starts at 68000 $ so you have a working example on load.
- Total hours billed to customers (hrs)
- The total hours billed to customers used in the calculation, measured in hrs. Starts at 620 hrs so you have a working example on load.
- Posted door rate ($/hr)
- The posted door rate used in the calculation, measured in $/hr. Starts at 145 $/hr so you have a working example on load.
- Fully-loaded tech cost per hour ($/hr)
- The fully-loaded tech cost per hour used in the calculation, measured in $/hr. Starts at 38 $/hr so you have a working example on load.
Results
- Effective labor rate
- Returned as a money amount in US dollars and shown as the headline result. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Gap vs door rate
- Returned as a percentage. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Labor gross margin
- Returned as a percentage. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Revenue left on table per month
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
FAQ
Why is my ELR always below my door rate?
Some gap is normal — 5-10% from menu pricing on maintenance items and occasional goodwill adjustments. Beyond that, look at your discount log by service advisor. A single advisor discounting 15% of tickets by $50 can drag the whole shop's ELR down two or three dollars an hour without anyone flagging it on a ticket-by-ticket basis.
Should ELR include warranty and comeback hours?
Include the hours in the denominator but only the revenue actually collected in the numerator. That's the point — comeback hours that generate zero revenue correctly drag ELR down and expose the true cost of comebacks instead of hiding them in 'billed but unpaid' hours.
What's a good labor gross margin target?
Most profitable independent shops run 65-72% labor gross margin. Dealerships often run higher because of factory-subsidized warranty rates. Below 60% usually means either technician pay plans are too rich for the ELR you're generating, or ELR itself needs to move up.
How often should I calculate this?
Monthly at minimum, tied to your P&L close. Weekly tracking during a pricing change or new advisor onboarding lets you catch drift before it compounds into a full month of underbilling.
Accuracy and limitations
- Results are estimates before tax, fees, and inflation unless an input explicitly covers them.
- Rates are treated as fixed for the whole period — variable-rate products will drift from this projection.
- This is educational maths, not financial advice. Check anything contractual with the lender or your accountant.
Related tools
Cite this calculator
Writing about this topic? Grab a citation — every link helps keep these tools free.
RevenueLab. (2026). Effective Labor Rate Calculator. Retrieved from https://www.revenuelab.fyi/toolbox/effective-labor-rate
<p>Source: <a href="https://www.revenuelab.fyi/toolbox/effective-labor-rate" target="_blank" rel="noopener">Effective Labor Rate Calculator — RevenueLab</a> (2026).</p>
Source: [Effective Labor Rate Calculator — RevenueLab](https://www.revenuelab.fyi/toolbox/effective-labor-rate) (2026).