How to Calculate Man-Hour Cost

On flat-rate projects, the cost of labor and materials can diminish your profit margin. By predicting how many hours it will take to complete the project and how many workers to hire, you can create a more-accurate quote for the client. Whether you pay your workers on contract or by the hour, calculating the man-hour costs before hiring contract workers for a project will provide you with a better idea of how much to pay.

1. Find the total number of hours worked by multiplying the number of working hours in a day by the number of total working days. For example, if your men worked 20 days for eight hours a day, the total number of hours would be 160 hours (20 x 8 = 160).

2. Multiply the total number of hours by the number of workers to find the total man-hours. For example, if there are three workers who worked 160 hours each, the total man-hours would be 480 man-hours (160 x 3 = 480).

3. Find the total labor costs from wages and salary and divide that by the number of man-hours to find the man-hour costs. For example, if the labor cost is $50,000 and there are 480 man-hours split between the three workers, the man-hour cost would be approximately $104 per man-hour ($50,000 / 160 = $104).