Enter your total revenue and your total payroll costs into the calculator to determine your labor percentage.

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## Labor Percentage Formula

The following formula is used to calculate a labor percentage.

L% = TPC / TR * 100

- Where L% is your labor percentage in terms of total revenue (%)
- TPC is your total payroll costs (labor) ($)
- TR is your total revenue generated as a direct result of that labor

## Labor Percentage Definition

**What is a labor percentage? **

A labor percentage is a ratio, expressed as a percent, of the total cost of labor with respect to the total revenue generated from that labor.

It’s important to note that in the calculation of a labor percentage, those payrolls and labor costs are only included if they are directly resulting in the production or process of making the revenue being analyzed.

## How to calculate labor percentage?

**Labor Percentage Example Problem: **

First, determine your total revenue generated in the business or segment being analyzed. In this example problem, a business generated $50,000.00 worth of revenue in the last month.

Next, determine the total labor costs that went into generating that revenue. This should include both direct labor (payroll) as well as benefits/OT/bonuses.

For this example, the total labor costs were $30,000.00.

Finally, calculate the labor percentage using the formula above:

L% = TPC / TR * 100

L% = 30000 / 50000 * 100

L% = 60%