The hourly rate that underpins every quote — including overheads, downtime and profit. Most workshops get this wrong.
Your shop rate is the hourly cost of running your workshop — including labour, overheads, and a return on the business — expressed per billable labour hour. It's the number that every labour estimate in every quote should be built on.
Start with your annual overhead costs: rent, utilities, insurance, equipment repayments, vehicle costs, software subscriptions, consumables. Add your own labour cost (wage equivalent plus employer costs). Divide by your realistic annual billable hours — not total hours, but hours that can actually be charged to jobs.
A 40-hour week doesn't produce 40 billable hours. Time spent quoting, purchasing, administration, machine maintenance, rework and travel reduces billable time. For a solo operator, realistic billable utilisation is often 55–65%. For a small team, 65–75% is achievable with good systems. Use a conservative number in your calculation.
Recalculate your shop rate annually, or whenever a significant cost changes — rent increase, new equipment repayment, additional staff. A rate calculated two years ago against different overheads is probably wrong today.
Get this principle applied to your local market — wages, currency and benchmarks.
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