Understanding the Fully Burdened Rate
A fully burdened rate (also known as a fully loaded labor rate, loaded labor cost, burdened labor rate, or true employee cost) represents the actual cost of an employee per productive hour. It is a critical metric for professional services companies when pricing projects and tracking profitability.
Why basic hourly rates are misleading
If you divide an $80,000 salary by 2,080 working hours, you get about $38.46 per hour. But this basic calculation ignores two massive factors: additional employment costs and non-billable time.
1. The Burden (Employment Costs): Beyond salary, you pay payroll taxes, benefits, health insurance, software licenses, and a share of office overhead. These can easily add 30-50% to base compensation.
2. Productive Hours: Your employees do not work 2,080 billable hours a year. Once you subtract vacation, holidays, sick leave, training, and administrative time, a typical full-time employee might only have 1,500 to 1,700 productive hours available.
Using this rate for planning
Terminology and formulas vary between companies, so this calculator provides a planning estimate rather than an accounting standard. By capturing employment costs and allocated overhead, then dividing by productive hours, the fully burdened rate helps project estimates account for costs a salary-only calculation misses.
In TrueClock, assigning an accurate cost rate to every employee means your project profitability reports will reflect the true cost of delivering work, not just a surface-level estimate.