Free tool · Robert × Dor
Retail labor cost
calculator.
Enter sales, staff hours and wages to get labor cost as a percentage of sales, sales per labor hour, and how many hours your target labor budget allows.
Labor cost percentage calculator
Labor cost as % of sales
20.6%
Labor is 5.6 points over your 15% target: 71 hours more than the target allows, or $9,003 short in sales.
- Sales per labor hour
- $92.31
- Labor cost per week
- $4,950
- Loaded cost per hour
- $19.04
- Wage plus taxes and benefits.
- Hours your target allows
- 189
- At $24,000 in sales.
- Break-even sales per labor hour
- $126.93
- Below this, labor exceeds 15%.
- Transactions per labor hour
- –
What to do next
- Before cutting 71 hours, find your quietest hours. Trimming those protects the busy hours that keep conversion up.
- Or grow into the rota: each labor hour needs to bring in $126.93; today it brings $92.31.
Show your work
Loaded hourly cost = wage × (1 + taxes & benefits)$17.00 × 1.12 = $19.04Labor cost = labor hours × loaded hourly cost260 × $19.04 = $4,950Labor cost % = labor cost ÷ net sales × 100$4,950 ÷ $24,000 × 100 = 20.6%Sales per labor hour = net sales ÷ labor hours$24,000 ÷ 260 = $92.31Hours allowed = target % × sales ÷ loaded hourly cost15% × $24,000 ÷ $19.04 = 189.1
Worked example.
A store sells $24,000 in a week with 260 paid hours at an average $17 an hour, plus 12% for payroll taxes and benefits.
- Loaded hourly cost: $17 × 1.12 = $19.04.
- Labor cost: 260 × $19.04 = $4,950 for the week.
- Labor cost %: $4,950 ÷ $24,000 = 20.6% of sales.
- Sales per labor hour: $24,000 ÷ 260 = $92.31.
- With a 15% target, the store can afford $3,600 ÷ $19.04 = 189 hours, about 71 fewer, or it needs $33,000 in sales to justify 260 hours.
Cutting 71 hours across the week isn’t the only answer. If those hours sit in your busiest periods, they may be what keeps conversion up. Knowing which hours are busy is what turns a labor % into a decision.
Labor cost % or sales per labor hour?
Labor cost % is a budget check: what share of every sales dollar goes to wages. It moves when wages change, so it’s the number finance cares about.
Sales per labor hour (SPLH) is a productivity check: what each staffed hour brings in. It ignores pay rates, so it’s better for comparing hours, days and stores.
We don’t publish a “good” labor % here because it varies widely by category, price point and service model, and we haven’t found a source we trust for it. Set your target from your own margins and track your trend.
Questions retailers ask.
How do I calculate labor cost percentage in retail?
Add up wages plus payroll taxes and benefits for a period, divide by net sales for the same period and multiply by 100. $4,950 of labor on $24,000 of sales is 20.6%.
How do I calculate sales per labor hour?
Divide net sales by total paid labor hours for the same period. $24,000 from 260 hours is $92.31 per labor hour.
Should I include the owner’s hours?
If you work shifts on the floor, include your hours, even unpaid, in SPLH so you see the real staffing level. For labor cost %, include what you’d pay someone to cover those hours if you want a true picture.
What’s a good labor cost percentage for a store?
It depends on your category, margins and service model, so set your target from your own gross margin and rent. Track it by week; a sudden rise usually means sales fell while the rota stayed the same.
How do I lower labor cost without hurting sales?
Move hours rather than cut them. Shift coverage from quiet hours to the hours with the most visitors. Hourly traffic data shows where those hours are.
Put your labor hours where the shoppers are.
Dor shows foot traffic and conversion by the hour next to your POS sales, so you can see which hours earn their staffing.
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