How to use the labor cost calculator
- Choose the worker type. A W-2 employee comes with payroll taxes, workers' comp and paid time off. A 1099 contractor usually doesn't — but you still carry training, equipment and unbilled time.
- Enter pay and hours. The hourly wage and the paid hours in a normal week.
- Add employer and hidden costs. Taxes and insurance as a percentage of wages, paid days off, benefits, training, equipment, and how much of the worked time is actually spent on clients' jobs.
- Read the minimum price. The big number is the price per cleaner-hour below which every hour you sell loses money. The highlighted price adds your target margin on top.
How the true cost of a cleaner is calculated
Yearly pay = pay per hour × paid hours per week × 52Total cost = pay + payroll taxes + workers' comp + benefits + training + equipmentHours worked = paid hours − paid time offBillable hours = hours worked × billable shareBreak-even rate = total cost ÷ billable hours + overhead per billable hourRecommended rate = break-even rate ÷ (1 − target margin)
The key idea: you pay for every hour a cleaner is on the clock, but clients only pay for the hours spent in their homes. Paid time off and driving between jobs both shrink the hours you can bill, so the real cost per billable hour is much higher than the wage.
In contractor mode the calculator drops payroll taxes, workers' comp, paid time off and benefits. Training, equipment and unbilled time still count, because they still cost you money.
Typical labor cost ranges
Typical ranges for the US and Canada. Taxes and insurance rates depend heavily on your state or province, payroll size and claims history — check your own numbers with your payroll provider or accountant.
| Cost item | Typical range |
|---|---|
| Employer payroll taxes | often 8–12% of wages |
| Workers' comp & liability insurance | often 3–10% of wages for cleaning |
| Paid days off | often 5–15 days a year |
| Billable share of worked time | often 70–85% for crews that drive between jobs |
| Fully loaded cost vs. base wage | commonly 1.2–1.4× per worked hour, more per billable hour |
| Price per cleaner-hour, cleaning company | about $40–$75 in many US and Canadian markets |
Worked example
A cleaner on payroll earns $20 an hour for 35 hours a week. Payroll taxes are 10%, workers' comp and insurance 5%, 10 paid days off, no benefits, $400 a year for training and $30 a month for uniforms and equipment. 80% of worked time is billable, overhead is $6 per billable hour and the target margin is 30%.
- Yearly pay: $20 × 35 × 52 = $36,400 (of which $1,400 is paid time off).
- Taxes $3,640 + insurance $1,820 + training $400 + equipment $360 → total cost $42,620 a year, about $3,552 a month.
- Hours worked: 1,820 − 70 hours off = 1,750; billable at 80% = 1,400.
- True cost per worked hour: $42,620 ÷ 1,750 ≈ $24.35 — 22% more than the wage.
- Cost per billable hour: $42,620 ÷ 1,400 ≈ $30.44; plus $6 overhead = $36.44 break-even.
- At a 30% margin, charge at least $52 per cleaner-hour.
The same person as a 1099 contractor at $20 an hour costs about $25.52 per billable hour, with a break-even of about $31.52. The gap is real — but so is the legal risk if the work is really employment. Classification depends on how you control the work, not on what the contract says.
5 labor cost mistakes cleaning companies make
- Pricing on the base wageA $20 cleaner doesn't cost $20 an hour. With taxes, insurance, time off and unbilled time, the real cost per billable hour is often 50% higher or more.
- Ignoring drive timeIf crews spend an hour a day driving, that's 12–15% of their paid time that no client pays for directly. It has to be built into your rates.
- Forgetting paid time off and holidaysYou pay for those days but sell nothing. Spread their cost over the hours actually worked.
- Calling employees contractorsMisclassification can bring back taxes, penalties and claims. If you set the schedule, supply the tools and train the method, the cleaner is likely an employee.
- Not updating when wages riseEvery raise moves your break-even rate. Re-run your numbers and adjust prices when pay, insurance or minimum wage changes.