How to Calculate Your True Hourly Cost as a Low-Voltage Contractor

Here's a question I like to ask guys who tell me they charge $85 an hour: what does an hour actually cost you? Not what you pay your tech — what it costs you to put that tech on a ladder for sixty minutes. Most can't answer. And if you can't answer, you don't know whether $85 is a healthy rate or a slow-motion bankruptcy.

The gap between what you pay and what an hour costs is bigger than almost everyone thinks. A tech earning $28 an hour doesn't cost you $28. By the time you've paid the government, the insurance company, the truck, and the hours nobody bills for, that tech usually costs you somewhere between $55 and $75 per billable hour. If you're pricing jobs off the wage number, you're donating the difference.

Let's build the real number, step by step, with figures you can sanity-check against your own books tonight.

Start with the wage, then add the burden

The national average for a low-voltage technician right now sits around $27 to $31 an hour depending on whose survey you read — Salary.com pegs it near $31, Indeed closer to $27.74. Say your lead installer makes $30. That's your base, and it's the last easy number you'll see.

On top of that wage rides what accountants call labor burden — every dollar you spend because that person works for you, beyond the paycheck itself. FICA alone is 7.65% of gross. Federal and state unemployment typically add another 2 to 6% depending on your state and claims history. Workers' comp for electrical trades generally runs 6 to 10% of payroll — better than roofers, worse than office staff, and it climbs fast if you've had a claim. Then benefits: even a modest health contribution and a 3% retirement match adds 10 to 25% for most shops. Paid time off is burden too. Two weeks of vacation plus six holidays means you're paying for roughly 128 hours a year that produce nothing.

Stack it all up and burden lands between 25 and 50% of base wages for most low-voltage shops. Split the difference at 35% and your $30 tech is really a $40.50 tech before he's pulled a single foot of cable. Shops with real benefits packages hit 45% without trying.

One thing the trade associations consistently recommend, and I agree with: calculate burden separately for each labor class. Your $22 helper and your $38 lead carry different comp rates and different benefits. One blended number hides the fact that some crews are way more expensive per hour than others.

The billable hours trap

Here's where most contractors blow the calculation, and it's the single practical mistake I want you to walk away from this article having fixed: they divide annual costs by 2,080 hours.

Nobody bills 2,080 hours. Nobody's even close. Between estimates, site walks, travel between jobs, loading the van, warranty callbacks, training, permit runs, and the Tuesday that got rained out because the GC wasn't ready, a field tech in this trade realistically bills 1,100 to 1,400 hours a year. Service-heavy shops with lots of short calls land at the bottom of that range; crews parked on one big commercial project for months land at the top. Six billable hours out of an eight-hour day is a good day for most of us, and the research backs that up — only 50 to 70% of paid time turns into invoiced time across the trades.

Why does this matter so much? Because dividing by the wrong denominator makes you look cheap to yourself. Say your fully burdened tech costs $84,240 a year ($40.50 × 2,080 paid hours — you pay him for all of them whether they bill or not). Divide by 2,080 and you think your cost is $40.50 an hour. Divide by a realistic 1,300 billable hours and it's $64.80. That's a $24-an-hour error, and it compounds across every job you bid all year. I've watched a two-truck structured cabling outfit run profitable-looking jobs for eighteen months while their bank account shrank, and this was the whole story. Their bids weren't wrong on materials or labor hours — the cost rate underneath everything was fiction.

So track it. Pull your last twelve months of invoices, total the hours you actually billed, and divide by the number of field employees. The number will sting. Use it anyway.

Now layer in overhead

Burden covers the costs attached to a person. Overhead covers the costs attached to the business — and in low-voltage work they're chunkier than they look because our overhead rides around in a van.

Run the annual numbers for a typical one-truck operation. A work van, once you count the payment, fuel, maintenance, and tires, runs $8,000 to $15,000 a year. Commercial auto adds $1,200 to $3,000. General liability for a small low-voltage shop is usually $500 to $1,500, and once you add tools coverage, a bond where your license requires one, and maybe cyber liability if you're touching access control and camera systems, total insurance for a small operation commonly lands in the $4,000 to $12,000 range. Then the quieter stuff: your certification renewals and license fees, the fluke tester you replace every few years, estimating software, phones, accounting, the storage unit full of ladder racks and spool holders. For most contracting businesses, overhead totals 30 to 50% of revenue. If you've never added yours up, budget an evening and a spreadsheet — it's the most profitable evening you'll spend this year.

Spread that overhead across billable hours too. A shop with $90,000 in annual overhead and two techs billing 1,300 hours each is carrying $34.62 of overhead on every billable hour, on top of the burdened labor.

Put the whole thing together for our example: $64.80 in burdened labor per billable hour plus $34.62 in overhead gives you a true cost of roughly $99.42 per billable hour. That's cost. Zero profit in it. If that shop is charging $95 an hour and feeling competitive, they're paying customers for the privilege of working. To clear a 10% net profit they need to be out the door at about $110, and honestly, 10% net is the floor I'd accept in this trade — the good operators run 15% or better.

And if you're an owner-operator doing the work yourself, don't skip your own line item. Pay yourself a market wage in the math — call it $35 an hour plus burden — before you calculate profit. "I don't pay myself so my rate can be lower" isn't a pricing strategy, it's a hobby with a van payment.

Two habits keep this number honest. First, recalculate at least twice a year. Insurance renewals, wage bumps, a comp rate adjustment after a claim — any of these can move your true cost $5 to $10 an hour, and you won't feel it until the year-end P&L. Most shops I know do it every January and July and it takes maybe an hour once the spreadsheet exists. Second, when you land on your number, resist the urge to shave it because a competitor across town is quoting less. Either he's got a leaner cost structure than you, or he hasn't done this math and won't be across town much longer. You don't win by matching the price of a guy who's going broke.

The formula itself is almost boring: wages plus burden plus overhead, divided by real billable hours, plus the profit you decide you deserve. What separates the shops that grow from the ones that grind is simply whether they've plugged their own honest numbers into it. Yours are sitting in last year's tax return and your invoice history right now. Go get them.