Use the same period for sales and labor: a week, a month or a quarter.
The formula
Labor cost percentage equals total labor cost divided by sales, times 100. Total labor is wages plus the extra cost on those wages plus any other labor you add.
To hit a target, either lower labor or raise sales. The last box shows the sales that would put your current labor at the target.
Ways to bring it down
Match staffing to busy hours, watch overtime, which costs 1.5 times the rate, and check whether open shifts are covered by overtime or by a new hire. The overtime cost calculator compares the two.
Related calculators
How do I calculate labor cost percentage?
Divide your total labor cost by your sales for the same period and multiply by 100. If labor costs $6,500 on $20,000 of sales, labor is 32.5%.
What should be included in labor cost?
Wages and salaries, plus employer payroll taxes and benefits. Many owners also include their own pay for the work they do in the business. This calculator lets you add wages, an extra percentage and other labor separately.
What is a good labor cost percentage?
It varies a lot by industry, location and business model, so there is no single number to trust. Enter your own target and the calculator shows how far you are from it.