What is a labour rate?
The price per hour you charge customers for work, separate from parts. It should cover your running costs and profit across the hours you can sell.
Mechanic labour rate calculator
Free mechanic labour rate calculator for UK garages and mobile mechanics. Enter your yearly costs, hours you can sell and target profit to see your hourly labour rate, with or without VAT. Free to use, no account needed.
Hourly rate you need
£47.10
- Day rate
- £282.61
- Money you need to bring in a year
- £65,000.00
- Paid days a year
- 230
- Paid hours a year
- 1380
This is an estimate only, provided for general guidance. It is not tax, accounting, financial or legal advice. Check any figures with a qualified professional before relying on them.
How to work out a garage labour rate
A labour rate needs to cover the cost of running the garage or mobile business for a year, plus the profit you want before tax, spread over the hours you can actually sell to customers. Hours sold are usually fewer than the hours you are at work, because diagnosis that you do not charge for, road tests, waiting for parts, cleaning down and admin all take time.
Include every running cost: rent, business rates, utilities, ramps and diagnostic equipment, software and data subscriptions, insurance, waste oil and parts disposal, and a van and fuel if you work mobile. If you employ technicians, add their total cost to you, not just their wages.
VAT and parts
If you are VAT registered, you normally add VAT at the standard rate of 20% to the price you charge. You must register once your taxable turnover goes over £90,000 in any rolling 12 months. Some work, such as certain energy-saving installations, has a different VAT rate, so check HMRC guidance for the jobs you do. The calculator only adds the standard rate.
This calculator covers labour only. Parts are usually priced separately with their own mark-up, so keep them out of the costs you enter here unless you do not charge for them.
Questions
Why are hours sold lower than hours worked?
Unpaid diagnosis, road tests, waiting for parts, cleaning and admin all take time that is not billed to a customer.
Does the calculator include tax?
No. Target profit is before income tax and National Insurance. VAT is added only if you tick that you are VAT registered.